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Standard Motor Products (SMP) Up 3.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Standard Motor Products (SMP - Free Report) . Shares have added about 3.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Standard Motor Products due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Standard Motor Puts On a Stellar Q4 Show

Standard Motor reported adjusted earnings of $1.08 per share for fourth-quarter 2020, which beat the Zacks Consensus Estimate of 66 cents. The bottom line was also higher than the prior-year quarter’s 59 cents per share. Robust performance of both its major segments — Engine Management and Temperature Control — aided fourth-quarter 2020 results.

Total revenues rose 17.4% year over year to $283 million, beating the Zacks Consensus Estimate of $253 million. Gross profit increased to $94.1 million from the year-ago quarter’s $72.8 million. Operating income also grew 74.7% year on year to $30.6 million.

The board approved a payout of 25 cents per share, payable on Mar 1, 2020. The company repurchased $4.8 million worth of stock during the quarter under review. Encouragingly, Standard Motor boosted buyback authorization by $20 billion. Standard Motor now has $26.5 million remaining under the current share-repurchase authorization.

Segmental Results

During the December-end quarter, revenues from the Engine Management segment totaled $231.9 million, up 14.8% year over year. Operating income was $29.2 million compared with the prior-year quarter’s $27.4 million.

Revenues in the Temperature Control segment increased 30% year over year to $47.7 million. The segment registered an operating income of more than $1 million versus a loss of around $3 million in the year-ago period.

Revenues in the All Other segment increased to $3.2 million from $2.6 million recorded in the prior-year quarter. The segment reported an operating loss of $7.1 million, wider than the loss of $5.7 million posted in the corresponding quarter of 2019.

Financial Position

Standard Motor had cash and cash equivalents of $19.5 million as of Dec 31, 2020 compared with $10.4 million in the corresponding period of 2019. Long-term debt was $97,000 compared with $129,000 recorded as of Dec 31, 2019. Fourth-quarter 2020 net cash provided by operating activities totaled $19.3 million. Capex for the quarter amounted to $4.65 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -17.36% due to these changes.

VGM Scores

Currently, Standard Motor Products has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 this revision indicates a downward shift. Notably, Standard Motor Products has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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