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Why Delphi Technologies (DLPH) is Down 22.6% Year to Date

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Shares of Delphi Technologies PLC DLPH have declined 22.6% on a year-to-date basis, underperforming the 12.3% rise of the industry it belongs to.


Let’s delve deeper into the factors that have led to the company’s underperformance.

Consecutive Revenue Miss

Delphi Technologies reported lower-than-expected revenue performance in the first three quarters of 2019. Unfavorable product mix, lower volume, adverse currency exchange movements, lower sales in China and decline in passenger car diesel revenues in Europe have been weighing on the stock’s overall performance.

Lowered 2019 Guidance

Further, Delphi Technologies has lowered its full-year 2019 guidance. It now expects revenues in the range of $4.30-$4.33 billion compared with the previously guided range of $4.43-$4.48 billion.

Adjusted earnings are now expected in the range of $2.25-$2.35 per share compared with the previously guided range of $2.65-$2.85.

Adjusted operating income margin is expected between 7% and 7.2% compared with the prior guidance of 8%. Cash flow from operations is anticipated to be $235-$250 million compared with the prior guidance of $280-$310 million. Capital expenditure is projected in the range of $350-$360 million compared with the prior guidance of $315-$325 million. Adjusted effective tax rate is expected around 19% compared with the prior guidance of 18%.

Stiff Competition

Delphi Technologies operates in the global automotive component supply industry for both OEM and aftermarket components. This industry is subject to stiff competition, rapid technological changes, short product life cycles, and cyclical and reduced consumer demand patterns. These factors can impact customers’ choices, thereby affecting order volumes. Although OEMs prefer to maintain long-term relationship with suppliers, they also continue to look out for other suppliers with innovative products.  All these factors can drive down the company’s overall growth.

Zacks Rank & Stocks to Consider

Currently, Delphi Technologies carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader Zacks Business Services sector are Global Payments (GPN - Free Report) , Mastercard MA and Cardtronics CATM. While Global Payments and Cardtronics sport a Zacks Rank #1 (Strong Buy), Mastercard carries a Zacks Rank #2 (Buy).  Long-term expected EPS (three to five years) growth rate for Global Payments, Mastercard and Cardtronics is 17%, 15.9% and 4%, respectively. You can see the complete list of today’s Zacks #1 Rank stocks here.

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