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Cooper-Standard (CPS) Down 21.4% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Cooper-Standard (CPS). Shares have lost about 21.4% 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 its most recent earnings report in order to get a better handle on the important drivers.

Cooper-Standard Q2 Earnings Lag Estimates, Down Y/Y

Cooper-Standard Holdings Inc. reported adjusted earnings of 31 cents per share in second-quarter 2019, which missed the Zacks Consensus Estimate of $1.11 per share. Further, the bottom line was lower than the year-ago quarter’s figure of $2.74 per share. The quarterly results were affected by challenging market conditions.

In the quarter under review, sales were $765 million that missed the Zacks Consensus Estimate of $820 million. The year-ago quarter’s figure amounted to $928 million. The year-over-year decline in sales was primarily caused by unfavorable volume and mix, foreign exchange as well as the sale of the company’s Anti-Vibration Systems (AVS).

During the reported quarter, adjusted net income was $5.4 million, down from the prior-year quarter’s figure of $50.3 million. Adjusted EBITDA declined to $58.1 million from $107.9 million recorded in the second quarter of 2018.

Segmental Performance

Sales in the North America segment were $404.9 million, down from the year-ago quarter’s figure of $477.6 million. During the quarter, adjusted EBITDA in the segment amounted to $54.9 million, down from $82.7 million recorded in the prior-year quarter.

Sales in the Europe segment were $216.2 million, down from $279.1 million in second-quarter 2018. The segment’s adjusted EBITDA was $6.1 million compared with $16.3 million in the prior-year quarter.

The Asia Pacific segment reported sales of $118.6 million in the reported quarter, down from $148 million in second-quarter 2018. The segment incurred adjusted EBITDA loss of $1.6 million, versus gain of $11.3 million in second-quarter 2018.

The company’s South America segment generated sales worth $25.1 million during the quarter under review, up from $23.5 million in second-quarter 2018. The segment reported loss of $1.3 million compared with prior-year quarter’s loss of $2.3 million.

Financials

Cooper-Standard had $310.8 million of cash and cash equivalents as of Jun 30, 2019 compared with $264.9 million as of Dec 31, 2018. The company had long-term debt of $737.8 million as of Jun 30 compared with $729.8 million recorded as of Dec 31, 2018.

2019 Outlook

For 2019, the company anticipates sales in the range of $3-$3.2 billion, down from the previous view of $3.2-$3.4 billion. It expects adjusted EBITDA in the band of $270-$300 million, down from the earlier guidance of $300-$340 million. Further, the company expects capital expenditure in the range of $175-$185 million.
 

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 -31.63% due to these changes.

VGM Scores

At this time, Cooper-Standard has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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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