Standard Motor Products Inc. ( SMP - Analyst Report ) became a Zacks #1 Rank (Strong Buy) earlier this week in the wake of its promising third quarter results. Furthermore, with a price-to-book (P/B) ratio of 1.5, this automotive replacement parts manufacturer makes a strong value proposition for investors.

Impressive Third Quarter

On October 30, Standard Motor Product revealed a 23.7% rise in adjusted earnings per share to 73 cents for the third quarter, beating the Zacks Consensus Estimate by more than 14%. The earnings growth was attributable to higher sales and product cost savings from recent acquisitions of BLD, Forecast Trading and Compressor Works, as the company relocates additional manufacturing hours to low cost regions.

Consolidated revenues in the quarter grew 16.8% to $276.0 million, thanks in large part to recent acquisitions. The company’s Temperature Control segment also performed well with a 39.7% rise in revenues to $95.2 million, despite the loss of business from a major customer.

Standard Motor Products expects to generate further savings in both product cost and operating expenses with the integration of newly acquired companies. It expects to achieve majority savings in 2013.

Earnings Estimates Moving Higher

The past 7 days have seen earnings estimates advance for both this year and next. The Zacks Consensus Estimate for 2012 is up 5.5% to $1.73 per share, suggesting year-over-year growth of more than 10%. The Zacks Consensus Estimate for 2013 rose 4.2% to $1.99, which would be a gain of more than 15% year over year.

Attractive Value

Standard Motor Products has attractive valuation metrics as the company’s forward price-to-earnings (P/E) of 11.5x stands significantly below the accepted level of 15.0x for a value stock, while its P/B is below the benchmark of 3.0x. Furthermore, it has a price-to-sales (P/S) ratio of 0.5 that is below the cut-off level of 1.0.

The chart below shows that shares of Standard Motor Products continued to outperform estimates in the past three years. With estimate lines moving up, the stock is likely to follow suit.

Headquartered in Long Island City, New York, Standard Motor Products Inc. was founded in 1919. The $447.27 million company is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. It supplies products to warehouse distributors, large retail chains, original equipment manufacturers and original equipment service part operations in the U.S., Canada and Latin America.

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