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Cooper-Standard (CPS) Down 23.4% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Cooper-Standard (CPS - Free Report) . Shares have lost about 23.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper-Standard due for a breakout? 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 drivers.

Cooper-Standard Q3 Earnings Miss Estimates, Down Y/Y

Cooper-Standard reported third-quarter 2018 adjusted earnings per share of $1.05, missing the Zacks Consensus Estimate of $2.50. Further, the bottom-line figure was lower than the year-ago quarter figure of $2.11 per share. Results in the reported quarter were impacted by challenging market conditions in Asia and Europe, and rising commodity costs.

Revenues decreased 0.8% year over year to $861.7 million. The decline in sales was primarily owing to unfavorable exchange rate fluctuations, unfavorable volume and mix in Asia and Europe, and customer price reductions, which were partly offset by favorable volume and mix in North America.

During the reported quarter, adjusted net income was $19.1 million, down from the prior-year quarter figure of $39.5 million. The company launched 51 customer programs and grabbed net new business awards, totaling $91 million. Adjusted EBITDA declined 27.6% to $26.5 million compared with the third quarter of 2017.

Segment Performance

Sales in the North America segment increased 7.8% to $471.6 million. The year-over-year rise in sales was mainly due to favorable volume and mix, and incremental sales related to acquisitions.

Sales in the Europe segment were $228.3 million in the third quarter compared with $254.4 million in third-quarter 2017. The decline was mainly due to unfavorable foreign exchange, and volume and mix.

The Asia Pacific segment reported sales of $136.2 million in the reported quarter, down from $148.5 million in third-quarter 2017. The year-over-year decrease was mainly due to unfavorable volume and mix, and unfavorable foreign exchange.

The company’s South America segment reported sales of $25.6 million during the reported quarter, down from $28.7 million in third-quarter 2017.  The fall was due to unfavorable foreign exchange.

Financials

Cooper-Standard had $282.4 million of cash and cash equivalents as of Sep 30, 2018, compared with $516 million as of Dec 31, 2017. The company had long-term debt of $727.2 million as of Sep 30, 2018, compared with $723.3 million recorded as of Dec 31, 2017.

2018 Outlook

The company anticipates sales of $3.63-$3.68 billion in 2018. The prior guidance was of $3.60-$3.70 billion. It changed the 2018 adjusted EBITDA margin guidance to 10.5-11.0% from the prior guidance of 12.7-13.0%.

Further, the company expects capital expenditure (as a percent of sales) of 5.9-6.0% in 2018. The prior guidance was of 5.7-5.9%.

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 -32.91% due to these changes.

VGM Scores

At this time, Cooper-Standard has a poor Growth Score of F, however its Momentum Score is doing a lot better 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 D. 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 this revision indicates a downward shift. It's no surprise Cooper-Standard has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.




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