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Sensata (ST) Down 6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Sensata (ST - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sensata 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.
Sensata Q1 Earnings & Revenues Top Estimates
Sensata reported strong first-quarter 2023 results, with the top and bottom lines surpassing the Zacks Consensus Estimate.
On an adjusted basis, the company reported earnings of 92 cents per share compared with 78 cents reported in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 88 cents per share.
Quarterly revenues aggregated $998.2 million, up 2.3% year over year. The top line beat the consensus estimate by 1.7%. Acquisitions and unfavorable currency changes reduced revenues by 0.1% and 2.3%, respectively.
Segmental Results
Performance Sensing revenues (75.3% of the total revenues) increased 4.7% year over year to $751.5 million. The Automotive sector benefited from price realization and strong market growth, partly offset by unfavorable foreign currency movement and launch delays. Segment operating income was $188.4 million compared with $180.6 million reported in the prior-year quarter.
Sensing Solutions revenues (24.7% of total revenues) were $246.7 million, down 4.4% from the year-ago quarter. The year-over-year downtick was caused by softness in HVAC and appliance markets and unfavorable foreign currency movement. The segment’s operating income decreased to $69.7 million from $72.5 million, mainly due to the dilutive impact of acquisitions.
On Apr 1, 2023, the company established a new Insights reporting segment to be consistent with new management reporting and offer visibility to the company’s revenue growth and margin advancement.
The financial results of Insights had previously been included in Performance Sensing. From the second quarter of 2023, Sensata will begin disclosing the financial results of its three segments - Performance Sensing, Sensing Solutions and Insights.
Other details
In the quarter under review, overall organic revenues were up 4.7%. The heavy vehicle off-road business witnessed a 9.4% increase in organic revenue growth. The automotive business reported organic revenue growth of 6%. The industrial business declined 6.7% organically. The aerospace business witnessed a 33.2% increase in organic revenues.
Total operating expenses were $849.3 million, down 0.1% compared with the prior-year quarter, primarily due to lower restructuring charges. Adjusted operating income was $192.9 million, up 5.7% compared with the year-ago quarter. The uptick was mainly caused by favorable pricing and productivity improvements, partially offset by unfavorable movements in foreign currency and the dilutive impact of acquisitions.
Adjusted EBITDA totaled $225.5 million in the quarter, up from $214.8 million in the previous year’s quarter.
Cash Flow & Liquidity
In the quarter under review, Sensata generated $96.9 million of net cash from operating activities compared with $47.4 million in the prior year. Free cash flow was $60 million compared with $11.6 million a year ago.
As of Mar 31, 2023, the company had $1,034.1 million in cash and cash equivalents and $3,768.6 million of net long-term debt compared with $1,225.5 million and $3,958.9 million, respectively, as of Dec 31, 2022.
In the quarter under review, Sensata returned $16.8 million to shareholders via quarterly dividends.
Guidance
Sensata provided guidance for the second quarter of 2023. For the quarter, the company expects revenues of $1,000-$1,040 million, suggesting a decline of 2% to a rise of 2% year over year. Adjusted operating income is expected to be $190-206 million, indicating a year-over-year decline of 2% to a rise of 6%.
Adjusted earnings per share are estimated to be 88-98 cents, suggesting a rise of 6 to 18%. Adjusted net income is expected to be $137-151 million, suggesting a year-over-year rise of 6% to 17%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Sensata has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Sensata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Sensata is part of the Zacks Instruments - Control industry. Over the past month, Badger Meter (BMI - Free Report) , a stock from the same industry, has gained 6.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
Badger Meter reported revenues of $159.1 million in the last reported quarter, representing a year-over-year change of +20.2%. EPS of $0.66 for the same period compares with $0.49 a year ago.
Badger Meter is expected to post earnings of $0.66 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Badger Meter. Also, the stock has a VGM Score of F.
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Sensata (ST) Down 6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Sensata (ST - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Sensata 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.
Sensata Q1 Earnings & Revenues Top Estimates
Sensata reported strong first-quarter 2023 results, with the top and bottom lines surpassing the Zacks Consensus Estimate.
On an adjusted basis, the company reported earnings of 92 cents per share compared with 78 cents reported in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate of 88 cents per share.
Quarterly revenues aggregated $998.2 million, up 2.3% year over year. The top line beat the consensus estimate by 1.7%. Acquisitions and unfavorable currency changes reduced revenues by 0.1% and 2.3%, respectively.
Segmental Results
Performance Sensing revenues (75.3% of the total revenues) increased 4.7% year over year to $751.5 million. The Automotive sector benefited from price realization and strong market growth, partly offset by unfavorable foreign currency movement and launch delays. Segment operating income was $188.4 million compared with $180.6 million reported in the prior-year quarter.
Sensing Solutions revenues (24.7% of total revenues) were $246.7 million, down 4.4% from the year-ago quarter. The year-over-year downtick was caused by softness in HVAC and appliance markets and unfavorable foreign currency movement. The segment’s operating income decreased to $69.7 million from $72.5 million, mainly due to the dilutive impact of acquisitions.
On Apr 1, 2023, the company established a new Insights reporting segment to be consistent with new management reporting and offer visibility to the company’s revenue growth and margin advancement.
The financial results of Insights had previously been included in Performance Sensing. From the second quarter of 2023, Sensata will begin disclosing the financial results of its three segments - Performance Sensing, Sensing Solutions and Insights.
Other details
In the quarter under review, overall organic revenues were up 4.7%. The heavy vehicle off-road business witnessed a 9.4% increase in organic revenue growth. The automotive business reported organic revenue growth of 6%. The industrial business declined 6.7% organically. The aerospace business witnessed a 33.2% increase in organic revenues.
Total operating expenses were $849.3 million, down 0.1% compared with the prior-year quarter, primarily due to lower restructuring charges. Adjusted operating income was $192.9 million, up 5.7% compared with the year-ago quarter. The uptick was mainly caused by favorable pricing and productivity improvements, partially offset by unfavorable movements in foreign currency and the dilutive impact of acquisitions.
Adjusted EBITDA totaled $225.5 million in the quarter, up from $214.8 million in the previous year’s quarter.
Cash Flow & Liquidity
In the quarter under review, Sensata generated $96.9 million of net cash from operating activities compared with $47.4 million in the prior year. Free cash flow was $60 million compared with $11.6 million a year ago.
As of Mar 31, 2023, the company had $1,034.1 million in cash and cash equivalents and $3,768.6 million of net long-term debt compared with $1,225.5 million and $3,958.9 million, respectively, as of Dec 31, 2022.
In the quarter under review, Sensata returned $16.8 million to shareholders via quarterly dividends.
Guidance
Sensata provided guidance for the second quarter of 2023. For the quarter, the company expects revenues of $1,000-$1,040 million, suggesting a decline of 2% to a rise of 2% year over year. Adjusted operating income is expected to be $190-206 million, indicating a year-over-year decline of 2% to a rise of 6%.
Adjusted earnings per share are estimated to be 88-98 cents, suggesting a rise of 6 to 18%. Adjusted net income is expected to be $137-151 million, suggesting a year-over-year rise of 6% to 17%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Sensata has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Sensata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Sensata is part of the Zacks Instruments - Control industry. Over the past month, Badger Meter (BMI - Free Report) , a stock from the same industry, has gained 6.3%. The company reported its results for the quarter ended March 2023 more than a month ago.
Badger Meter reported revenues of $159.1 million in the last reported quarter, representing a year-over-year change of +20.2%. EPS of $0.66 for the same period compares with $0.49 a year ago.
Badger Meter is expected to post earnings of $0.66 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Badger Meter. Also, the stock has a VGM Score of F.