It has been about a month since the last earnings report for Standard Motor Products (SMP Quick QuoteSMP - Free Report) . Shares have lost about 6.4% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

Standard Motor Q1 Earnings Surpass Expectations, Decline Y/Y

Standard Motor reported adjusted earnings per share (EPS) of 45 cents, which declined from 61 cents reported in the prior-year quarter but beat the Zacks Consensus Estimate of 40 cents.

Total revenues rose to $331.4 million from $328 million reported in the first quarter of 2023. The reported figure also beat the Zacks Consensus Estimate of $323 million. Gross profit fell to $89.5 million from the year-ago quarter’s $91.27 million. Operating income declined to $14.62 million from $20.75 million reported in the year-ago quarter.

Segmental Results

In the reported quarter, revenues from the Vehicle Control segment totaled $185.5 million, which rose 0.5% year over year and beat our estimate of $177.5 million due to normalized ordering patterns following a slowdown in the fourth quarter of 2023. Operating income was $15.6 million, down from the prior-year quarter’s $17.6 million.

Revenues from the Engineered Solutions segment totaled $74.3 million, up 4.6% year over year. The metric also surpassed our estimate of $73 million. Operating income was $2.24 million, down from the prior-year quarter’s $5.73 million.

Revenues from the Temperature Control segment came in at $71.6 million, which declined from the year-ago quarter’s $72.4 million, as well as missed our projection of $74.4 million due to the timing of pre-season orders. The segment registered an operating income of $2.1 million, down from $2.63 million reported in the year-ago period.

Operating loss from the Other segment was $5.18 million, wider than the loss of $4.36 million recorded in the year-ago quarter.

Financial Position

Standard Motor had $27.1 million in cash as of Mar 31, 2024, compared with $32.5 million as of Dec 31, 2023.

Long-term debt totaled $209.9 million as of Mar 31, 2024, compared with $151.2 million as of Dec 31, 2023.

Net cash outflow from operating activities totaled $45.7 million at the end of the first quarter of 2024. SG&A expenses rose 7.3% to $74.7 million.

The company approved a quarterly dividend of 29 cents per share, which will be paid out on Jun 3, 2024, to stockholders of record as of May 15, 2024.

Guidance 2024

For 2024, the company expects sales growth to be flat to low single-digit. Standard Motor expects adjusted EBITDA in the range of 9-9.5% of total revenues. Operating expenses, inclusive of factoring, are expected in the range of $76-$82 million for each of the remaining three quarters of 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

At this time, Standard Motor Products has a subpar Growth Score of D, 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 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Standard Motor Products has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.