Aptiv PLC (APTV Quick QuoteAPTV - Free Report) shares have performed impressively over the past three months. The stock returned 13.2%, which compared favorably with the 3.8% rally of the industry it belongs to and the 5.8% rise of the Zacks S&P 500 composite.

The Zacks Consensus Estimate for the company’s 2023 earnings of $4.74 indicates growth of 39% from that reported a year ago. Moreover, earnings are expected to register 28.9% growth in 2024. APTV has a long-term expected earnings per share growth rate of 18.2%.

Factors That Augur Well

Aptiv is exposed to the lucrative connected cars market. With security becoming a key selling point for connected cars, automakers are increasingly seeking related technologies. This is one of the reasons behind the quick advancement of the driver-assistance system market. Demand for personalization, infotainment connectivity and convenience are increasing rapidly. Added features require more wiring inside vehicles.

We believe that with excellent system integration expertise, Aptiv is well-positioned to leverage the growing electrification, connectivity and autonomy trends in the automotive sector.

The company’s "smart architecture" provides a competitive advantage and should help it continue gaining market share. Decreasing environmental impact and increasing fuel economy are the key industry trends, and OEMs have increased their search for better engine management and lower power consumption. Aptiv intends to take advantage of this trend as its “smart architecture” reduces wiring requirements in cars, helping them become fuel-efficient and add features.

The 2022 acquisition of Wind River expanded Aptiv’s position in the automotive software solutions market. Another 2022 acquisition, Intercable Automotive Solutions, strengthened the company’s position as a global leader in vehicle architecture systems. Aptiv intends to continue making investments aimed at organic and inorganic growth. Since it acquires a large number of companies on an ongoing basis, the integration of these companies generates cost synergies, which improve the efficiency of the combined company.

A Risk

Aptiv’s current ratio (a measure of liquidity) was at 1.76 at the end of second-quarter 2023, lower than the 2.63 recorded at the end of the prior-year quarter. A decreasing current ratio indicates that the company may have difficulty meeting its short-term obligations.

Zacks Rank and Stocks to Consider

Aptiv currently carries a Zacks Rank #3 (Hold).

Here are two better-ranked stocks from the Business Services sector:

DocuSign (DOCU Quick QuoteDOCU - Free Report) beat the Zacks Consensus Estimate in the four trailing quarters and has an earnings surprise of 25.6%. The consensus estimate for 2023 earnings is pegged at $2.52 per share, indicating 24.1% year-over-year growth. The consensus mark for 2023 revenues indicates an 8.1% increase from the year-ago reported figure. DOCU currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CRA International (CRAI Quick QuoteCRAI - Free Report) beat the Zacks Consensus Estimate in two of the four trailing quarters and missed on two instances, the average earnings surprise being 5.1%. The Zacks Consensus Estimate for 2023 revenues indicates a 6.6% increase from the year-ago reported figure. The consensus mark for earnings is pegged at $5.49 per share, indicating a 7.6% year-over-year decline. CRAI carries a Zacks Rank #2 (Buy) at present.