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Standard Motor (SMP) Beats on Q3 Earnings and Revenues
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Share price of Standard Motor Products Inc. (SMP - Free Report) fell 1.7% to $46.98 on Oct 27 as investors reacted negatively to the company’s plans to close the acquired Nogales plant, which will lead to significant severance and capital expenses.
Meanwhile, the company reported a considerable improvement in adjusted earnings per share to 92 cents in the third quarter of 2016 from 80 cents earned in the prior-year quarter. Earnings also exceeded the Zacks Consensus Estimate of 90 cents. Adjusted earnings from continuing operations increased to $21.3 million from $18.4 million in the year-ago quarter.
Earnings from continuing operations, on a reported basis, amounted to $21.1 million or 91 cents per share, rising from $19.2 million or 83 cents in the prior-year quarter.
Total revenue rose to $300.8 million from $270 million a year ago, surpassing the Zacks Consensus Estimate of $300 million.
Gross profit increased to $95.6 million (30.2% of sales) from $81.6 million (31.8% of sales) in the third quarter of 2015. Operating income improved to $33.6 million from $30 million in the year-ago quarter.
Revenues at the Engine Management segment rose to $200.8 million in the reported quarter from $176.4 million a year ago. Operating profit was $30.2 million (15.0% of sales) compared with $24.6 million (14.0% of sales) in the prior-year quarter.
Revenues at the Temperature Control segment increased to $96.8 million from $90.6 million a year ago. The segment recorded an operating profit of $9.9 million (10.3% of sales), up from $9.0 million (9.9% of sales) in third-quarter 2015.
Revenues at the All Other segment increased to $3.2 million from $3.0 million a year ago. The segment recorded an operating loss of $5.8 million, wider than $4.0 million in the third quarter of 2015.
Financial Position
Standard Motor had cash balance of $30.5 million as of Sep 30, 2016, compared with $18.8 million as of Dec 31, 2015. Long-term debt of the company was $178,000 as of Sep 30, 2016, compared with $78,000 as of Dec 31, 2015.
In the first nine months of 2016, Standard Motor had cash flow of $83 million from operating activities compared with $72.8 million in the prior-year period. Capital expenditures were $15.2 million, up from the year-ago level of $14.6 million.
Business Update
Standard Motor announced that it will shift production from the acquired Nogales, Mexico, wire set assembly operation to its existing wire assembly business in Reynosa, Mexico by the end of 2017. Following this, the company will close the Nogales plant. It expects one-time expenses of $3 million related to the closure.
As announced earlier, Standard Motor will also close its Grapevine, TX, facility and relocate the production lines to Greenville, SC, and Reynosa, Mexico. Further, it will relocate some production lines from Greenville, SC, to Bialystok, Poland. The company plans to complete these actions by the end of 2017, which should result in significant synergies and cost savings.
Dividend
Standard Motor’s board approved a dividend of 17 cents per share. The dividend will be paid on Dec 1, to shareholders on record as of Nov 15, 2016.
Outlook
Standard Motor expects sales in the Engine Management segment to increase in the low- to mid-single digits range this year.
Zacks Rank
Standard Motor currently sports a Zacks Rank #1 (Strong Buy). Some other well-ranked stocks in the auto space include Spartan Motors Inc. , Gentex Corp. (GNTX - Free Report) and Magna International Inc. (MGA - Free Report) .
Magna International managed to beat earnings in the last four quarters, delivering a positive average surprise of 4.18%. The company holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Spartan Motors, carrying a Zacks Rank #2, has a long-term expected growth rate of 15%, compared to the industry average of 12%.
Gentex, also a Zacks Rank #2 stock, has a long-term expected growth rate of 11.20%.
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Standard Motor (SMP) Beats on Q3 Earnings and Revenues
Share price of Standard Motor Products Inc. (SMP - Free Report) fell 1.7% to $46.98 on Oct 27 as investors reacted negatively to the company’s plans to close the acquired Nogales plant, which will lead to significant severance and capital expenses.
Meanwhile, the company reported a considerable improvement in adjusted earnings per share to 92 cents in the third quarter of 2016 from 80 cents earned in the prior-year quarter. Earnings also exceeded the Zacks Consensus Estimate of 90 cents. Adjusted earnings from continuing operations increased to $21.3 million from $18.4 million in the year-ago quarter.
Earnings from continuing operations, on a reported basis, amounted to $21.1 million or 91 cents per share, rising from $19.2 million or 83 cents in the prior-year quarter.
Total revenue rose to $300.8 million from $270 million a year ago, surpassing the Zacks Consensus Estimate of $300 million.
Gross profit increased to $95.6 million (30.2% of sales) from $81.6 million (31.8% of sales) in the third quarter of 2015. Operating income improved to $33.6 million from $30 million in the year-ago quarter.
STANDARD MOTOR Price, Consensus and EPS Surprise
STANDARD MOTOR Price, Consensus and EPS Surprise | STANDARD MOTOR Quote
Segment Results
Revenues at the Engine Management segment rose to $200.8 million in the reported quarter from $176.4 million a year ago. Operating profit was $30.2 million (15.0% of sales) compared with $24.6 million (14.0% of sales) in the prior-year quarter.
Revenues at the Temperature Control segment increased to $96.8 million from $90.6 million a year ago. The segment recorded an operating profit of $9.9 million (10.3% of sales), up from $9.0 million (9.9% of sales) in third-quarter 2015.
Revenues at the All Other segment increased to $3.2 million from $3.0 million a year ago. The segment recorded an operating loss of $5.8 million, wider than $4.0 million in the third quarter of 2015.
Financial Position
Standard Motor had cash balance of $30.5 million as of Sep 30, 2016, compared with $18.8 million as of Dec 31, 2015. Long-term debt of the company was $178,000 as of Sep 30, 2016, compared with $78,000 as of Dec 31, 2015.
In the first nine months of 2016, Standard Motor had cash flow of $83 million from operating activities compared with $72.8 million in the prior-year period. Capital expenditures were $15.2 million, up from the year-ago level of $14.6 million.
Business Update
Standard Motor announced that it will shift production from the acquired Nogales, Mexico, wire set assembly operation to its existing wire assembly business in Reynosa, Mexico by the end of 2017. Following this, the company will close the Nogales plant. It expects one-time expenses of $3 million related to the closure.
As announced earlier, Standard Motor will also close its Grapevine, TX, facility and relocate the production lines to Greenville, SC, and Reynosa, Mexico. Further, it will relocate some production lines from Greenville, SC, to Bialystok, Poland. The company plans to complete these actions by the end of 2017, which should result in significant synergies and cost savings.
Dividend
Standard Motor’s board approved a dividend of 17 cents per share. The dividend will be paid on Dec 1, to shareholders on record as of Nov 15, 2016.
Outlook
Standard Motor expects sales in the Engine Management segment to increase in the low- to mid-single digits range this year.
Zacks Rank
Standard Motor currently sports a Zacks Rank #1 (Strong Buy). Some other well-ranked stocks in the auto space include Spartan Motors Inc. , Gentex Corp. (GNTX - Free Report) and Magna International Inc. (MGA - Free Report) .
Magna International managed to beat earnings in the last four quarters, delivering a positive average surprise of 4.18%. The company holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Spartan Motors, carrying a Zacks Rank #2, has a long-term expected growth rate of 15%, compared to the industry average of 12%.
Gentex, also a Zacks Rank #2 stock, has a long-term expected growth rate of 11.20%.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>