Adient (ADNT) Down 12.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Adient (ADNT). Shares have lost about 12.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Adient 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 catalysts.
Adient Q3 Earnings Miss Estimates
Adient reported adjusted earnings per share of 98 cents for the third quarter of fiscal 2023. Earnings jumped from 8 cents recorded in the year-ago period as well as beat the Zacks Consensus Estimate of 39 cents. The outperformance largely stemmed from higher-than-anticipated revenues from the Americas segment. In the reported quarter, Adient generated net sales of $4,055 million, which increased 16% year over year and surpassed the Zacks Consensus Estimate of $3,806 million.
Segmental Performance
Adient currently operates through three reportable segments — the Americas, including North America and South America; Europe, the Middle East and Africa (EMEA) and Asia Pacific/China (Asia).
In the reported quarter, the Americas segment recorded revenues of $1,900 million, an increase of 13.5% from the year-ago period, topping our projection of $1,613.2 million on improved volume and mix. The segment posted an adjusted EBITDA of $95 million, up from $70 million recorded in the prior-year period and slightly topping our estimate of $94.1 million, driven by the sales outperformance and increased equity income.
In the fiscal third quarter, the EMEA segment registered revenues of $1,438 million, which increased 18.3% year over year but fell short of our forecast of $1,467.5 million on lower-than-expected volumes. The segment recorded EBITDA of $103 million in the quarter under review, higher than the $31 million generated in the year-ago period and also outpaced our expectation of $81 million on the back of a non-recurring insurance recovery as well as forex benefits.
In the reported quarter, revenues in the Asia segment came in at $742 million, up 18.3% year over year and topping our estimate of $690.7 million on improved volume and mix. The segment’s adjusted EBITDA grew 56.25% to $100 million on improved sales and high equity income.
Financial Position
Adient had cash and cash equivalents of $908 million as of Jun 30, 2023 compared with $947 million on Sep 30, 2022. Long-term debt amounted to $2,532 million in the reported quarter, down from $2,564 million as of Sep 30, 2022. Capital expenditures totaled $60 million in the fiscal third quarter of 2023 compared with $53 million in the prior-year quarter.
Outlook
Adient updated its fiscal 2023 forecast. It envisions revenues of $15.4 billion, up from the prior guidance of $15 billion. Adjusted EBITDA is estimated to be $920 million, up from the previous projection of $850 million. Expected equity income and capex are forecast to be $80 million and $300 million, respectively. FCF is now estimated to be $275 million, up from the previous estimate of $215 million. Interest expenses and cash tax are now estimated to be $180 million and $95 million, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -8.79% due to these changes.
VGM Scores
At this time, Adient 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Adient has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Adient belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Oshkosh (OSK), has gained 0.1% over the past month. More than a month has passed since the company reported results for the quarter ended June 2023.
Oshkosh reported revenues of $2.41 billion in the last reported quarter, representing a year-over-year change of +16.8%. EPS of $2.69 for the same period compares with $0.41 a year ago.
For the current quarter, Oshkosh is expected to post earnings of $2.18 per share, indicating a change of +118% from the year-ago quarter. The Zacks Consensus Estimate has changed +20.4% over the last 30 days.
Oshkosh has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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