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Standard Motor Products (SMP) Down 3.9% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Standard Motor Products (SMP - Free Report) . Shares have lost about 3.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Standard Motor Products due for a breakout? 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 drivers.

Standard Motor Q1 Earnings Beat But Fall Y/Y

Standard Motor Products reported first-quarter 2022 adjusted earnings of 92 cents per share, beating the Zacks Consensus Estimate of 81 cents. However, the bottom line declined from the prior-year quarter’s 97 cents.

Total revenues rose 16.6% year over year to $323 million, surpassing the Zacks Consensus Estimate of $311 million. Gross profit rose to $89.8 million from the year-ago quarter’s $83.8 million. Operating income declined 8.2% to $26.9 million, owing to an escalation in SG&A expenses, which flared up 15.5% year over year. SMP expects its consolidated gross margin in the band of 28-29% for 2022.

The board approved a dividend of 27 cents per share, payable on Jun 1, 2022, to stockholders of record on May 16, 2022. The company repurchased common shares worth $6.9 million during the quarter under review, with $22.8 million remaining under the current buyback authorization.

Segmental Results

During the reported quarter, revenues from the Engine Management segment totaled $239.3 million, up 13% year over year. The upside was driven by a combination of strong demand, continued success from customer initiatives, new business wins, the positive impact of recent acquisitions and the benefit of price increases implemented in the quarter. The operating income was $26.7 million compared with the prior-year quarter’s $31.1 million.

Revenues from the Temperature Control segment rose 30% year over year to $81.3 million, led by strong pre-season orders, and new business wins in winter-related categories. The segment registered an operating income of $5.2 million, rising from $3.6 million.

Revenues from the All Other segment came in at $2.2 million, rising from $2 million in the prior-year period. The segment reported an operating loss of $5 million, narrower than a loss of $5.4 million incurred in the corresponding quarter of 2021.

Financial Position

Standard Motor had $19.9 million in cash as of Mar 31, 2022, compared with $21.8 million as of Dec 31, 2021. Net cash used in operating activities totaled $103.9 million for the first quarter of 2022, compared with $11.4 million used in the corresponding period last year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Standard Motor Products has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Standard Motor Products has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Standard Motor Products is part of the Zacks Automotive - Replacement Parts industry. Over the past month, Genuine Parts (GPC - Free Report) , a stock from the same industry, has gained 0.5%. The company reported its results for the quarter ended March 2022 more than a month ago.

Genuine Parts reported revenues of $5.29 billion in the last reported quarter, representing a year-over-year change of +18.6%. EPS of $1.86 for the same period compares with $1.50 a year ago.

For the current quarter, Genuine Parts is expected to post earnings of $2.02 per share, indicating a change of +16.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Genuine Parts has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.


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