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Standard Motor Downshifting

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New York-based Standard Motor Products Inc. ([url=https://www.zacks.com/research/report.php?t=SMP]SMP[/url]) enjoys strong brand recognition and a less cyclical end-market within the auto and auto parts industry. Moreover, SMP expects to benefit from the shifting of its production facilities to Reynosa, Mexico due to lower labor costs.

In the third quarter, Standard Motor’s consolidated net sales were $202.9 million, compared to consolidated net sales of $206.2 million during the comparable quarter in 2007. Earnings from continuing operations for the third quarter of 2008 were $397 thousand or 2 cents per diluted share, compared to earnings of $4.8 million or 26 cents per diluted share in the third quarter of 2007.

Excluding restructuring expenses for previously announced facility moves, a deferred gain from the sale and leaseback of the corporate facilities in Long Island City, New York and a gain from the repurchase of $20.6 million of debentures, earnings from continuing operations for the third quarter of 2008 were $499 thousand or 3 cents per diluted share, compared to earnings in the comparable quarter in 2007 of $5.6 million or 30 cents per diluted share.

However, slow growth, weak pricing in the company’s key businesses and higher gasoline and metal prices are serious matters of concern. Further, the company’s Temperature Control segment is facing strong competition from Chinese imports. Thus, we rate shares of SMP a Hold with a target price of $3.

[url=https://www.zacks.com/ZER/zer_comp_reports.php?f_ticker=SMP]Read the full analyst report on SMP[/url]



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