Standard Motor Product Inc. (SMP - Analyst Report) announced that its Board of Directors has approved the repurchase of an additional $5 million of common stock under the existing share repurchase program. The newly approved authorization is an addition to the previously completed $5 million repurchase program authorized by the Board of Directors on August 25, 2011.
Standard Motor will repurchase the shares periodically in the open market or through private transaction. It will be funded by the company’s revolving credit facility.
The repurchased shares will be considered as treasury stock and will be used for general corporate purposes including the plan for equity compensation. However, the repurchase program can be stopped or suspended at any point of time.
Standard Motor, based in Long Island City in New York was founded in 1919. It is one of the leading manufacturers, distributors and marketers of automotive replacement parts in the U.S. Further it enjoys strong brand recognition globally.
Standard Motor is in an advantageous position due to the recent acquisition of Compressor Works, which is a manufacturer of Temperature Control products with a capacity of $60 million. The acquisition will lead to cost savings and boost earnings of the company in 2012. However, strong competition may ruin the company’s margins. Its competitors include Visteon Corp. (VC - Snapshot Report) and Denso Corp.
As a result, the company retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) “Hold” rating and we have a long-term (more than 6 months) “Neutral” recommendation on the stock.