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Sensata (ST) Up 3.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Sensata (ST - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata 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.
Sensata Q4 Earnings Miss Estimates
Sensata reported fourth-quarter 2023 adjusted earnings per share (EPS) of 81 cents compared with 96 cents a year ago. The bottom line missed the Zacks Consensus Estimate of 86 cents.
Quarterly revenues aggregated $992.5 million, down 2.2% year over year. Unfavorable currency changes reduced revenues by 0.9%. However, the top line beat the consensus estimate by 1.4%.
Segmental Results
Performance Sensing revenues (75.9% of total revenues) increased 0.9% year over year to $753 million. The Automotive sector benefited from market and content growth, partly offset by unfavorable revenue mix and foreign currency movement. Segmental operating income was $184.4 million compared with $192.9 million in the prior-year quarter.
Sensing Solutions revenues (24.1%) were $239.5 million, down 10.7% year over year. The downtick was caused by a weakness in industrial revenue growth, which offset an increase in Aerospace revenues. Industrial revenue growth was affected by inventory de-stocking, a sluggish global construction market and unfavorable forex volatility. ST expects these trends to continue in the first half of the year and start to subside in the second half of 2024.
The segment’s operating income decreased to $68.2 million from $78.4 million in the prior year quarter, mainly due to a decline in industrial revenue growth.
Other Details
In the quarter under review, overall organic revenues were down 1.3%. The heavy vehicle off-road business witnessed an increase of 1.1% in organic revenue growth. The automotive business reported organic revenue growth of 2.1%. The industrial business plunged 14.4% organically. The aerospace business witnessed an 11.8% jump in organic revenues.
Total operating expenses were $1.194 billion, up 38.5% year over year, primarily due to goodwill impairment charges. Adjusted operating income was $183.7 million, down 10.1% year over year. The downward movement was mainly caused by unfavorable product mix and movements in foreign currency along with pricing headwinds.
Adjusted EBITDA totaled $218.2 million in the quarter, down from $244.5 million in the prior year.
Cash Flow & Liquidity
In the quarter under discussion, Sensata generated $105.1 million of net cash from operating activities compared with $224.9 million in the prior-year quarter. Free cash flow was $56.7 million compared with $185.2 million a year ago.
As of Dec 31, 2023, the company had $508.1 million in cash and cash equivalents and $3,374 million of net long-term debt compared with $889.7 million and $3,771.8 million, respectively, as of Sep 30, 2023.
In the reported quarter, Sensata returned $18.2 million to shareholders via quarterly dividends and repurchased shares worth $28.1 million.
Guidance
Sensata provided guidance for the first quarter of 2024. The company expects revenues in the range of $970-$1,010 million, suggesting growth in the range of (3)-1% from the year-ago levels. Adjusted operating income is projected to be between $178 million and 190 million, indicating a decline of 2-8% from the prior-year reading.
Adjusted EPS is estimated to be between 82 cents and 88 cents, hinting at a decline of 4-11%. Adjusted net income is anticipated in the $124-134 million band, implying a fall of 5-12% from a year ago.
ST expects forex volatility to negatively impact its first-quarter results. The expected headwind to revenues, adjusted operating margin and adjusted earnings per share is $7 million, 60 basis points and 5 cents, respectively.
Full-year revenue growth is forecast in the range of 2-3%. Revenues will likely be flat to slightly down from the year-earlier levels in the first half owing to industrial markets witnessing a destocking pressure. Revenues in the second half of the year are expected to increase in the range of 3-5% from the prior-year actuals, driven by new launches and ramping of products.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -6.96% due to these changes.
VGM Scores
At this time, Sensata has an average Growth Score of C, a grade with the same score on the momentum front. 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 B. 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 Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 13.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Badger Meter reported revenues of $182.44 million in the last reported quarter, representing a year-over-year change of +23.8%. EPS of $0.84 for the same period compares with $0.60 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.81 per share, indicating a change of +22.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Badger Meter. Also, the stock has a VGM Score of C.
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Sensata (ST) Up 3.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Sensata (ST - Free Report) . Shares have added about 3.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata 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.
Sensata Q4 Earnings Miss Estimates
Sensata reported fourth-quarter 2023 adjusted earnings per share (EPS) of 81 cents compared with 96 cents a year ago. The bottom line missed the Zacks Consensus Estimate of 86 cents.
Quarterly revenues aggregated $992.5 million, down 2.2% year over year. Unfavorable currency changes reduced revenues by 0.9%. However, the top line beat the consensus estimate by 1.4%.
Segmental Results
Performance Sensing revenues (75.9% of total revenues) increased 0.9% year over year to $753 million. The Automotive sector benefited from market and content growth, partly offset by unfavorable revenue mix and foreign currency movement. Segmental operating income was $184.4 million compared with $192.9 million in the prior-year quarter.
Sensing Solutions revenues (24.1%) were $239.5 million, down 10.7% year over year. The downtick was caused by a weakness in industrial revenue growth, which offset an increase in Aerospace revenues. Industrial revenue growth was affected by inventory de-stocking, a sluggish global construction market and unfavorable forex volatility. ST expects these trends to continue in the first half of the year and start to subside in the second half of 2024.
The segment’s operating income decreased to $68.2 million from $78.4 million in the prior year quarter, mainly due to a decline in industrial revenue growth.
Other Details
In the quarter under review, overall organic revenues were down 1.3%. The heavy vehicle off-road business witnessed an increase of 1.1% in organic revenue growth. The automotive business reported organic revenue growth of 2.1%. The industrial business plunged 14.4% organically. The aerospace business witnessed an 11.8% jump in organic revenues.
Total operating expenses were $1.194 billion, up 38.5% year over year, primarily due to goodwill impairment charges. Adjusted operating income was $183.7 million, down 10.1% year over year. The downward movement was mainly caused by unfavorable product mix and movements in foreign currency along with pricing headwinds.
Adjusted EBITDA totaled $218.2 million in the quarter, down from $244.5 million in the prior year.
Cash Flow & Liquidity
In the quarter under discussion, Sensata generated $105.1 million of net cash from operating activities compared with $224.9 million in the prior-year quarter. Free cash flow was $56.7 million compared with $185.2 million a year ago.
As of Dec 31, 2023, the company had $508.1 million in cash and cash equivalents and $3,374 million of net long-term debt compared with $889.7 million and $3,771.8 million, respectively, as of Sep 30, 2023.
In the reported quarter, Sensata returned $18.2 million to shareholders via quarterly dividends and repurchased shares worth $28.1 million.
Guidance
Sensata provided guidance for the first quarter of 2024. The company expects revenues in the range of $970-$1,010 million, suggesting growth in the range of (3)-1% from the year-ago levels. Adjusted operating income is projected to be between $178 million and 190 million, indicating a decline of 2-8% from the prior-year reading.
Adjusted EPS is estimated to be between 82 cents and 88 cents, hinting at a decline of 4-11%. Adjusted net income is anticipated in the $124-134 million band, implying a fall of 5-12% from a year ago.
ST expects forex volatility to negatively impact its first-quarter results. The expected headwind to revenues, adjusted operating margin and adjusted earnings per share is $7 million, 60 basis points and 5 cents, respectively.
Full-year revenue growth is forecast in the range of 2-3%. Revenues will likely be flat to slightly down from the year-earlier levels in the first half owing to industrial markets witnessing a destocking pressure. Revenues in the second half of the year are expected to increase in the range of 3-5% from the prior-year actuals, driven by new launches and ramping of products.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -6.96% due to these changes.
VGM Scores
At this time, Sensata has an average Growth Score of C, a grade with the same score on the momentum front. 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 B. 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 Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Badger Meter (BMI - Free Report) , has gained 13.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Badger Meter reported revenues of $182.44 million in the last reported quarter, representing a year-over-year change of +23.8%. EPS of $0.84 for the same period compares with $0.60 a year ago.
For the current quarter, Badger Meter is expected to post earnings of $0.81 per share, indicating a change of +22.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Badger Meter. Also, the stock has a VGM Score of C.