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Why Is Aptiv (APTV) Down 7.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for Aptiv (APTV - Free Report) . Shares have lost about 7.7% 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 Earnings and Revenues Surpass Estimates in Q3

Aptiv reported better-than-expected third-quarter 2018 results.

Adjusted earnings of $1.24 per share surpassed the Zacks Consensus Estimate by 4 cents and met the midpoint of the guided range. Revenues of $3.5 billion exceeded the consensus mark by $63 million and came slightly below the midpoint of the guided range.

In the quarter, Aptiv completed the acquisition of Winchester Interconnect, which is expected to strengthen the company’s Signal and Power Solutions segment.

Quarterly Numbers in Detail

Revenues from the Signal and Power Solutions segment came in at $2.5 billion, up 9% on a year-over-year basis and contributing 73% to total revenues. Advanced Safety and User Experience revenues of $956 million improved 13% year over year and contributed 27% to total revenues.

Adjusted operating income of $420 million increased 7% year over year. Adjusted operating income margin of 12.1% contracted 40 basis points (bps) year over year.

Aptiv ended the third quarter with cash and cash equivalents balance of $771 million compared with $970 million in the previous quarter. Long-term debt was $4.1 billion, roughly flat sequentially.

Total available liquidity at the end of the third quarter was $3.1 billion compared with $3.3 billion at the end of the prior quarter. Net cash provided by operating activities was $119 million and capital expenditures were $212 million in the quarter.

The company repurchased 0.79 million shares for roughly $69 million in the quarter, leaving roughly $767 million shares for future share repurchases under its existing share repurchase program. Aptiv paid cash dividend of $58 million.

2018 Guidance

Aptiv trimmed its 2018 guidance. The company anticipates earnings to be in the range of $5.11 -$5.17 per share compared with the prior guidance of $5.30-$5.40. Net sales are expected between $14.275 billion and $14.375 billion compared with $14.350 billion and $14.550 billion anticipated earlier.

Adjusted operating income is now expected in the range of $1.73-$1.75 billion compared with the previous guidance of $1.79-$1.82 billion. Aptiv expects adjusted operating income margin to be between 12.1% and 12.2%, lower than the previous guidance of roughly 12.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -13.53% due to these changes.

VGM Scores

Currently, Aptiv has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 Aptiv has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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