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Cooper-Standard (CPS) Up 0.5% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Cooper-Standard (CPS - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cooper-Standard 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.

Cooper-Standard’s Q2 Earnings Miss Estimates, Up Y/Y

Cooper-Standard reported second-quarter 2018 adjusted earnings per share of $2.74, missing the Zacks Consensus Estimate of $3. However, the bottom-line figure was higher than the year-ago quarter figure of $2.60 per share. This year-over-year rise can be attributed to rise in operating efficiency and decline in selling, general, administrative and engineering (SGA&E) expenses, which were partly offset by customer price reductions, unfavorable volume and mix, and high material costs.

Revenues increased 2.1% year over year to $928.3 million. The rise in sales is primarily owing to favorable exchange rate fluctuations, along with favorable volume and mix, and net of customer price reductions.

During the reported quarter, adjusted net income was $50.3 million, up from the prior-year quarter figure of $49 million. The company launched 51 customer programs and grabbed net new business awards, totaling $144 million. Adjusted EBITDA declined 5.2% to $107.9 million compared with the second quarter of 2017.

Segment Performance

Sales in the North America segment decreased 0.8% to $477.6 million. The year-over-year decline in sales was mainly due to customer price reductions.

Sales in the Europe segment were $279.1 million in the second quarter, up 7.2% year over year. The improvement was mainly due to favorable foreign exchange, and volume and mix, partially offset by customer price reductions.

The Asia Pacific segment reported sales of $148 million in the reported quarter, up 5.1% compared with second-quarter 2017. The year-over-year increase was mainly due to a favorable foreign exchange and incremental sales from acquisitions, partly offset by customer price reductions, and an unfavorable volume and mix.

The company’s South America segment reported sales of $23.5 million during the reported quarter, down 10.3% year over year.  The fall was due to the unfavorable foreign exchange.

Financials

Cooper-Standard had $440.2 million of cash and cash equivalents as of Jun 30, 2018, compared with $420.2 million as of Mar 31, 2018. The company had long-term debt of $723 million as of Jun 30, 2018, compared with $723.3 million recorded on Dec 31, 2017.

2018 Outlook

The company anticipates sales of $3.60-$3.70 billion in 2018, up from the prior guidance of $3.55-$3.60 billion. It changed the 2018 adjusted EBITDA margin guidance to 12.7-13.0% from the prior guidance of 12.7-13.3%.

Further, the company expects capital expenditure (as a percent of sales) of 5.7-5.9% in 2018 from the prior guidance of 5.5-5.9%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 13.73% due to these changes.

VGM Scores

At this time, Cooper-Standard has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. 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 trending upward for the stock, and the magnitude of this revision looks promising. Notably, Cooper-Standard has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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