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Aptiv (APTV) Surpasses Q2 Earnings and Revenue Estimates

Zacks Equity Research

Aptiv PLC APTV posted better-than-expected second-quarter 2019 results.

Adjusted earnings of $1.33 per share surpassed the Zacks Consensus Estimate by 20 cents but declined 5% year over year. The figure exceeded the guided range of $1.11-$1.17 per share.

Revenues of $3.63 billion beat the consensus mark by $3 million but decreased 2% year over year. Revenues came within the guided range of $3.60-$3.70 billion.

So far this year, shares of Aptiv have gained 32.5%, outperforming the 23.3% rally of the industry it belongs to.

Quarterly Numbers in Detail

Revenues in the Signal and Power Solutions segment totaled $2.59 billion, down 2% on a year-over-year basis and contributing 71% to total revenues. Advanced Safety and User Experience revenues of $1.05 billion were up 1% year over year and contributed 29% to total revenues.

Adjusted operating income of $405 million fell 14.6% year over year. Adjusted operating income margin declined to 11.2% from 12.9% in the prior-year quarter due to unfavorable impacts of foreign currency exchange, vehicle production declines in China and continued incremental investments for growth, which were partially offset by higher sales growth.

Aptiv exited the quarter with cash and cash equivalents balance of $365 million compared with $321 million at the end of prior quarter. Long-term debt was $4 billion, roughly flat with the prior-quarter figure.

Total available liquidity at the end of the quarter was $2.2 billion compared with $2.1 billion at the end of the prior quarter. Net cash provided by operating activities was $512 million and capital expenditures were $216 million in the quarter.

During the second quarter, Aptiv returned $177 million to shareholders through share repurchases and dividends. The company repurchased 1.6 million shares for $120 million and paid out $57 million in dividend payments.

Third-Quarter Guidance

For the third quarter, Aptiv projects adjusted earnings in the range of $1.27-$1.33 per share, the mid-point of which lies below the Zacks Consensus Estimate of $1.32. Net sales are expected in the range of $3.60-$3.70 billion, the mid-point of which is above the Zacks Consensus Estimate of $3.61 billion.

Adjusted operating income is expected in the range of $415-$435 million. Adjusted operating income margin is anticipated between 11.5%-11.8%. Adjusted effective tax rate is expected to be approximately 15%.

Full-Year 2019 Guidance

The company expects adjusted earnings in the range of $5.05-$5.15 per share, above the Zacks Consensus estimate of $5.

Net sales are anticipated between $14.525 billion and $14.725 billion, the mid-point of which is below the Zacks Consensus Estimate of $14.97 billion.

Adjusted operating income is now expected in the range of $1.65-$1.69 billion. Adjusted operating income margin is anticipated between 11.4-11.5%. The company expects capital expenditures of $800 million and adjusted effective tax rate between 12-13% for the full year.

Zacks Rank & Stocks to Consider

Currently, Aptiv carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Business Services sector include Broadridge BR, Accenture ACN and Total System Services TSS, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term expected EPS (three to five years) growth rate for Broadridge, Accenture and Total System is 10%, 10.3% and 12.1%, respectively.

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