A month has gone by since the last earnings report for Meritor . 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 Meritor 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.
Meritor Q2 Earnings Beat Estimates, Decline Y/Y
Meritor posted adjusted earnings per share of 68 cents for second-quarter fiscal 2021 (ended Mar 31, 2021), surpassing the Zacks Consensus Estimate of 65 cents. Higher-than-anticipated revenues and profit from the Commercial Truck & Trailer segment resulted in this outperformance.
The bottom line, however, declined from the year-ago adjusted earnings of 74 cents a share. Sales rose 12.8% year over year to $983 million for the fiscal second quarter and surpassed the Zacks Consensus Estimate of $950 million.
Adjusted EBITDA edged up to $111 million from the year-earlier quarter’s $107 million. However, adjusted EBITDA margin was 11.3% compared with the prior year’s 12.3%.
Segment Results
For the March-end quarter, revenues in the Commercial Truck & Trailer segment amounted to $777 million, up 23% year over year on higher market volumes in all markets served. Moreover, the figure outpaced the Zacks Consensus Estimate of $735 million. The segment reported adjusted EBITDA of $73 million, up from $58 million witnessed in the year-ago quarter on higher sales and cost-cut efforts. The figure also surpassed the consensus mark of $62 million. EBITDA margin expanded to 9.4% for the quarter from 9.2% recorded in the prior-year quarter.
Quarterly revenues in the Aftermarket & Industrial segment totaled $247 million, dropping 10.8% from the year-ago level on account of termination of the WABCO distribution arrangement. The revenue figure also missed the Zacks Consensus Estimate of $266 million. The segment’s adjusted EBITDA was $34 million, down from $46 million recorded in the prior-year period. The metric also fell shy of the consensus mark of $42.61 million. EBITDA margin contracted to 13.8% for the quarter from 16.6% during the year-ago period.
Financial Position
For the reported quarter, Meritor’s cash and cash equivalents summed $321 million as of Mar 31, 2021. Long-term debt was $1,186 million at fiscal second quarter-end.
Its cash flow from operating activities for the quarter under review was $63 million compared with cash used for operating activities of $309 million in the year-ago quarter. For the quarter ended Mar 31, 2021, capital expenditure was $16 million compared with $17 million incurred in the comparable year-ago period.
FY21 View
For fiscal 2021, Meritor projects sales in the range of $3.65-$3.8 billion. Cash flow from operations and free cash flow are anticipated in the band of $205-$220 million and $110-$125 million, respectively. Further, the firm projects adjusted earnings per share in the band of $2.25-$2.50.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -27.34% due to these changes.
VGM Scores
Currently, Meritor has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 these revisions indicates a downward shift. It's no surprise Meritor has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Meritor (MTOR) Up 3.5% Since Last Earnings Report?
A month has gone by since the last earnings report for Meritor . 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 Meritor 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.
Meritor Q2 Earnings Beat Estimates, Decline Y/Y
Meritor posted adjusted earnings per share of 68 cents for second-quarter fiscal 2021 (ended Mar 31, 2021), surpassing the Zacks Consensus Estimate of 65 cents. Higher-than-anticipated revenues and profit from the Commercial Truck & Trailer segment resulted in this outperformance.
The bottom line, however, declined from the year-ago adjusted earnings of 74 cents a share. Sales rose 12.8% year over year to $983 million for the fiscal second quarter and surpassed the Zacks Consensus Estimate of $950 million.
Adjusted EBITDA edged up to $111 million from the year-earlier quarter’s $107 million. However, adjusted EBITDA margin was 11.3% compared with the prior year’s 12.3%.
Segment Results
For the March-end quarter, revenues in the Commercial Truck & Trailer segment amounted to $777 million, up 23% year over year on higher market volumes in all markets served. Moreover, the figure outpaced the Zacks Consensus Estimate of $735 million. The segment reported adjusted EBITDA of $73 million, up from $58 million witnessed in the year-ago quarter on higher sales and cost-cut efforts. The figure also surpassed the consensus mark of $62 million. EBITDA margin expanded to 9.4% for the quarter from 9.2% recorded in the prior-year quarter.
Quarterly revenues in the Aftermarket & Industrial segment totaled $247 million, dropping 10.8% from the year-ago level on account of termination of the WABCO distribution arrangement. The revenue figure also missed the Zacks Consensus Estimate of $266 million. The segment’s adjusted EBITDA was $34 million, down from $46 million recorded in the prior-year period. The metric also fell shy of the consensus mark of $42.61 million. EBITDA margin contracted to 13.8% for the quarter from 16.6% during the year-ago period.
Financial Position
For the reported quarter, Meritor’s cash and cash equivalents summed $321 million as of Mar 31, 2021. Long-term debt was $1,186 million at fiscal second quarter-end.
Its cash flow from operating activities for the quarter under review was $63 million compared with cash used for operating activities of $309 million in the year-ago quarter. For the quarter ended Mar 31, 2021, capital expenditure was $16 million compared with $17 million incurred in the comparable year-ago period.
FY21 View
For fiscal 2021, Meritor projects sales in the range of $3.65-$3.8 billion. Cash flow from operations and free cash flow are anticipated in the band of $205-$220 million and $110-$125 million, respectively. Further, the firm projects adjusted earnings per share in the band of $2.25-$2.50.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -27.34% due to these changes.
VGM Scores
Currently, Meritor has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 these revisions indicates a downward shift. It's no surprise Meritor has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.