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Shares of Tenneco Inc. jumped 6.2% to $56.52 on Jul 29 after the company reported better-than-expected earnings. Tenneco reported adjusted earnings per share of $1.78 in the second quarter of 2016 that outpaced the Zacks Consensus Estimate of $1.60. Moreover, earnings per share increased 28.1% from $1.39 recorded in the second quarter of 2015. Also, adjusted net income went up 18.6% to $102 million from $86 million a year ago.
On a reported basis, Tenneco’s net income came in at $86 million or $1.49 per share, compared with $78 million or $1.26 per share in the year-ago quarter.
Revenues rose 4% year over year to $2.21 billion, but marginally missed the Zacks Consensus Estimate of $2.23 billion. The year-over-year increase in revenues was driven by an improvement in light vehicle revenue in Europe, China and India. Excluding currency effects, revenues rose 6% to $2.3 billion. Revenue growth outpaced global aggregate industry production growth of 3%.
Global aftermarket revenues declined 4%. Commercial truck and off-highway revenue slipped 1%. Light vehicle revenue rose 6%, driven by better performance in Europe, China and India.
Adjusted EBIT (earnings before interest, taxes and non-controlling interests) increased 12% to a record high of $182 million from $162 million a year ago. Improvement in EBIT was driven by higher light vehicle revenue in both Clean Air and Ride Performance product lines, commercial truck and off-highway clean air content growth and operational cost improvements. Adjusted EBIT margin improved to 8.2% from 7.6% a year ago.
Revenues from the Clean Air division rose 6.2% to $1.55 billion from $1.46 billion a year ago. Adjusted EBIT increased to $135 million from $108 million in the prior-year quarter.
Revenues from the Ride Performance division went down to $660 million from $669 million a year ago. Adjusted EBIT decreased to $76 million from $77 million in the year-ago quarter.
Financial Position
Tenneco had cash and cash equivalents of $311 million as of Jun 30, 2016, up from $287 million as of Dec 31, 2015. Total debt was $1.36 billion as of Jun 30, 2016, compared with $1.21 billion as of Dec 31, 2015.
In the first half of 2016, cash flow from operating activities was $100 million, compared with $82 million in the first half of 2015. Capital expenditures for the said period totaled $136 million compared with $148 million a year ago.
Share Repurchase
In second-quarter 2016, the company bought back 773,000 shares for $41 million. Since announcing the share repurchase program in 2015, Tenneco has repurchased 5.4 million shares for $270 million, representing 9% of shares outstanding at that time.
Outlook
Total revenue is expected to improve about 7% in the third quarter of 2016 based on better production level. Revenues in the third quarter will also benefit from stronger global light vehicle volumes, driven by new launches and the ramp-up of recently launched platforms, along with solid contribution from the global aftermarket.
The aggregate industry production is projected to improve 5% in the third quarter, backed by a 5% increase in light vehicle industry production, partially offset by a 1% decline in combined commercial truck and off-highway industry production.
For 2016, the company expects total revenue growth of about 6%. It expects to exceed global industry production by 3%. Tenneco also anticipates that it will record year-over-year expansion in adjusted margin for the remainder of the year.
Tenneco further expects that it will record better performance both in 2017 and 2018.
Zacks Rank
Tenneco currently carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
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Tenneco's (TEN) Q2 Earnings Beat Estimates, Improve Y/Y
Shares of Tenneco Inc. jumped 6.2% to $56.52 on Jul 29 after the company reported better-than-expected earnings. Tenneco reported adjusted earnings per share of $1.78 in the second quarter of 2016 that outpaced the Zacks Consensus Estimate of $1.60. Moreover, earnings per share increased 28.1% from $1.39 recorded in the second quarter of 2015. Also, adjusted net income went up 18.6% to $102 million from $86 million a year ago.
On a reported basis, Tenneco’s net income came in at $86 million or $1.49 per share, compared with $78 million or $1.26 per share in the year-ago quarter.
Revenues rose 4% year over year to $2.21 billion, but marginally missed the Zacks Consensus Estimate of $2.23 billion. The year-over-year increase in revenues was driven by an improvement in light vehicle revenue in Europe, China and India. Excluding currency effects, revenues rose 6% to $2.3 billion. Revenue growth outpaced global aggregate industry production growth of 3%.
Global aftermarket revenues declined 4%. Commercial truck and off-highway revenue slipped 1%. Light vehicle revenue rose 6%, driven by better performance in Europe, China and India.
Adjusted EBIT (earnings before interest, taxes and non-controlling interests) increased 12% to a record high of $182 million from $162 million a year ago. Improvement in EBIT was driven by higher light vehicle revenue in both Clean Air and Ride Performance product lines, commercial truck and off-highway clean air content growth and operational cost improvements. Adjusted EBIT margin improved to 8.2% from 7.6% a year ago.
TENNECO INC Price, Consensus and EPS Surprise
TENNECO INC Price, Consensus and EPS Surprise | TENNECO INC Quote
Segment Results
Revenues from the Clean Air division rose 6.2% to $1.55 billion from $1.46 billion a year ago. Adjusted EBIT increased to $135 million from $108 million in the prior-year quarter.
Revenues from the Ride Performance division went down to $660 million from $669 million a year ago. Adjusted EBIT decreased to $76 million from $77 million in the year-ago quarter.
Financial Position
Tenneco had cash and cash equivalents of $311 million as of Jun 30, 2016, up from $287 million as of Dec 31, 2015. Total debt was $1.36 billion as of Jun 30, 2016, compared with $1.21 billion as of Dec 31, 2015.
In the first half of 2016, cash flow from operating activities was $100 million, compared with $82 million in the first half of 2015. Capital expenditures for the said period totaled $136 million compared with $148 million a year ago.
Share Repurchase
In second-quarter 2016, the company bought back 773,000 shares for $41 million. Since announcing the share repurchase program in 2015, Tenneco has repurchased 5.4 million shares for $270 million, representing 9% of shares outstanding at that time.
Outlook
Total revenue is expected to improve about 7% in the third quarter of 2016 based on better production level. Revenues in the third quarter will also benefit from stronger global light vehicle volumes, driven by new launches and the ramp-up of recently launched platforms, along with solid contribution from the global aftermarket.
The aggregate industry production is projected to improve 5% in the third quarter, backed by a 5% increase in light vehicle industry production, partially offset by a 1% decline in combined commercial truck and off-highway industry production.
For 2016, the company expects total revenue growth of about 6%. It expects to exceed global industry production by 3%. Tenneco also anticipates that it will record year-over-year expansion in adjusted margin for the remainder of the year.
Tenneco further expects that it will record better performance both in 2017 and 2018.
Zacks Rank
Tenneco currently carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include The Goodyear Tire & Rubber Company (GT - Free Report) , Johnson Controls Inc. (JCI - Free Report) and Gentex Corp. (GNTX - Free Report) , each carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>