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Sensata (ST) Up 15.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 15.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sensata Q3 Earnings Miss Estimates,
Sensata reported tepid third-quarter 2022 results, with only the top line surpassing the Zacks Consensus Estimate.
On an adjusted basis, the company reported earnings of 85 cents per share compared with 87 cents reported in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 86 cents per share.
Quarterly revenues aggregated $1.02 billion, up 7.1% year over year. The top line beat the consensus estimate by 1.1%. Acquisitions acted as tailwinds, but unfavorable currency changes reduced revenues by 3.3%.
Segmental Results
Performance Sensing revenues (74.1% of the total revenues) increased 6.8% year over year to $754.5 million. The Automotive sector benefited from new product launches, price realization and strong market growth partly offset by unfavorable foreign currency movement. Segment operating income was $188.6 million compared with $193.7 million reported in the prior-year quarter. The operating income fell year over year due to increased supply-chain constraints, unfavorable foreign currency movement and a negative impact from customer mix and acquisitions.
Sensing Solutions revenues (25.9% of total revenues) were $263.7 million, up 7.8% from the year-ago quarter. The year-over-year improvement was led by the latest electrification launches and revenues from acquisitions partially offset by unfavorable foreign currency movement.
The segment’s operating income decreased to $73.6 million from $75.3 million, mainly due to inflation-induced higher logistics and material costs, increased supply-chain constraints and the dilutive impact of acquisitions.
Other details
In the quarter under review, overall organic revenues were up 7.1%. The heavy vehicle off-road business witnessed a 3.4% decline in organic revenue growth. The automotive business reported organic revenue growth of 11.9%. The industrial business rose 6.4% organically. The aerospace business witnessed a 10% increase in organic revenues.
Total operating expenses were $765.4 million, down 3.1% compared with the prior-year quarter, primarily due to lower restructuring charges. Adjusted operating income was $197.3 million, down 1.8% compared with the year-ago quarter. The downtick was mainly caused by the divestiture of Connects semiconductor test and thermal business, investment in Megatrends of Electrification and Insights, unfavorable foreign currency movement and customer mix.
Adjusted EBITDA totaled $224.2 million in the quarter, down from $229.6 million in the previous year’s quarter.
Cash Flow & Liquidity
In the quarter under review, Sensata generated $93.8 million of net cash from operating activities compared with $125.3 million in the prior year. Free cash flow was $57.5 million compared with $88.5 million a year ago.
As of Sep 30, 2022, the company had $1,103.9 million in cash and cash equivalents, with $4,208.7 million of net long-term debt compared with $1,558.6 million and $4,213.5 million, respectively, as of Jun 30, 2022.
In the quarter under review, Sensata repurchased shares worth $97.6 million.
Guidance
Sensata provided guidance for the fourth quarter of 2022. For the quarter, the company expects revenues of $980-$1,020 million, suggesting a rise of 5-9% year over year. Adjusted operating income is expected to be $193-205 million, indicating a year-over-year decline of 2% to a rise of 4%.
Adjusted earnings per share are estimated to be 85-91 cents, suggesting a decline of 2% to a rise of 5%. Adjusted net income is expected to be $130-140 million, suggesting a year-over-year decline of 7% to a rise of 1%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Sensata has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 8.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Badger Meter reported revenues of $148.01 million in the last reported quarter, representing a year-over-year change of +15%. EPS of $0.61 for the same period compares with $0.54 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.61 per share, indicating a change of +3.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Badger Meter. Also, the stock has a VGM Score of D.
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Sensata (ST) Up 15.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 15.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sensata Q3 Earnings Miss Estimates,
Sensata reported tepid third-quarter 2022 results, with only the top line surpassing the Zacks Consensus Estimate.
On an adjusted basis, the company reported earnings of 85 cents per share compared with 87 cents reported in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of 86 cents per share.
Quarterly revenues aggregated $1.02 billion, up 7.1% year over year. The top line beat the consensus estimate by 1.1%. Acquisitions acted as tailwinds, but unfavorable currency changes reduced revenues by 3.3%.
Segmental Results
Performance Sensing revenues (74.1% of the total revenues) increased 6.8% year over year to $754.5 million. The Automotive sector benefited from new product launches, price realization and strong market growth partly offset by unfavorable foreign currency movement. Segment operating income was $188.6 million compared with $193.7 million reported in the prior-year quarter. The operating income fell year over year due to increased supply-chain constraints, unfavorable foreign currency movement and a negative impact from customer mix and acquisitions.
Sensing Solutions revenues (25.9% of total revenues) were $263.7 million, up 7.8% from the year-ago quarter. The year-over-year improvement was led by the latest electrification launches and revenues from acquisitions partially offset by unfavorable foreign currency movement.
The segment’s operating income decreased to $73.6 million from $75.3 million, mainly due to inflation-induced higher logistics and material costs, increased supply-chain constraints and the dilutive impact of acquisitions.
Other details
In the quarter under review, overall organic revenues were up 7.1%. The heavy vehicle off-road business witnessed a 3.4% decline in organic revenue growth. The automotive business reported organic revenue growth of 11.9%. The industrial business rose 6.4% organically. The aerospace business witnessed a 10% increase in organic revenues.
Total operating expenses were $765.4 million, down 3.1% compared with the prior-year quarter, primarily due to lower restructuring charges. Adjusted operating income was $197.3 million, down 1.8% compared with the year-ago quarter. The downtick was mainly caused by the divestiture of Connects semiconductor test and thermal business, investment in Megatrends of Electrification and Insights, unfavorable foreign currency movement and customer mix.
Adjusted EBITDA totaled $224.2 million in the quarter, down from $229.6 million in the previous year’s quarter.
Cash Flow & Liquidity
In the quarter under review, Sensata generated $93.8 million of net cash from operating activities compared with $125.3 million in the prior year. Free cash flow was $57.5 million compared with $88.5 million a year ago.
As of Sep 30, 2022, the company had $1,103.9 million in cash and cash equivalents, with $4,208.7 million of net long-term debt compared with $1,558.6 million and $4,213.5 million, respectively, as of Jun 30, 2022.
In the quarter under review, Sensata repurchased shares worth $97.6 million.
Guidance
Sensata provided guidance for the fourth quarter of 2022. For the quarter, the company expects revenues of $980-$1,020 million, suggesting a rise of 5-9% year over year. Adjusted operating income is expected to be $193-205 million, indicating a year-over-year decline of 2% to a rise of 4%.
Adjusted earnings per share are estimated to be 85-91 cents, suggesting a decline of 2% to a rise of 5%. Adjusted net income is expected to be $130-140 million, suggesting a year-over-year decline of 7% to a rise of 1%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Sensata has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 8.1% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Badger Meter reported revenues of $148.01 million in the last reported quarter, representing a year-over-year change of +15%. EPS of $0.61 for the same period compares with $0.54 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.61 per share, indicating a change of +3.4% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Badger Meter. Also, the stock has a VGM Score of D.