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Aptiv (APTV) Down 5.3% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Aptiv (APTV - Free Report) . Shares have lost about 5.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Aptiv 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 catalysts.

Aptiv Surpasses Q2 Earnings Estimates, 2018 View Up

Aptiv PLC reported better-than-expected second-quarter 2018 results. Adjusted earnings of $1.40 per share surpassed the Zacks Consensus Estimate by 3 cents and came above the guided range of $1.33-$1.39 per share. Revenues came in at $3.7 billion, which surpassed the consensus mark by $134 million and the guided range of $3.5-$3.6 billion.

Quarterly Numbers in Detail

Revenues from the Signal and Power Solutions segment totaled $2.7 billion, increasing 13% on a year-over-year basis and contributing 72% to total revenues. Advanced Safety and User Experience revenues of $1 billion improved 27% year over year and contributed 28% to total revenues.

Adjusted operating income of $474 million was up 19.1% year over year. Adjusted operating income margin of 12.9% expanded 30 basis points (bps) year over year.

Aptiv ended the quarter with cash and cash equivalents balance of $970 million compared with $1.3 billion in the prior quarter. Total available liquidity at the end of the second quarter was $3.3 billion compared with $3.7 billion at the end of the prior quarter. Cash flow from continuing operating activities summed $566 million in the quarter.

The company repurchased 0.04 million shares for roughly $4 million in the quarter, leaving roughly $836 million shares for future share repurchases under its existing share repurchase program. Aptiv paid cash dividend of $58 million in the quarter.

3Q18 Guidance

For the third quarter of 2018, Aptiv expects net sales to lie between $3.425 billion and $3.525 billion. Adjusted operating income is expected in the range of $410-$430 million. Adjusted earnings per share are envisioned to be between $1.21 and $1.26.

2018 Guidance

Aptiv raised its 2018 guidance for earnings and net sales. The company anticipates earnings to be in the range of $5.30-$5.40 per share compared with the prior guidance of $5.20-$5.40 per share. Net sales are envisioned between $14.35 billion and $14.55 billion compared with $13.95 billion and $14.35 billion anticipated earlier. Adjusted operating income is expected in the range of $1.79-$1.82 billion compared with the previous guidance of $1.75-$1.83 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Aptiv 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.

Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Aptiv has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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