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Cooper-Standard (CPS) Down 24.7% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Cooper-Standard (CPS). Shares have lost about 24.7% 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 Q1 Earnings Miss Estimates, Down Y/Y

Cooper-Standard reported adjusted earnings of 67 cents per share in first-quarter 2019, missing the Zacks Consensus Estimate of $1. Further, the bottom-line figure was lower than the year-ago quarter figure of $3.45 per share. Challenging market conditions impacted the company’s results.

Sales were $880 million, which beat the Zacks Consensus Estimate of $874 million. The year-ago figure was $967.4 million. This year-over-year decline in sales was primarily due to unfavorable volume and mix, foreign exchange, and price adjustments, partly offset by positive impacts of acquisitions.

During the reported quarter, adjusted net income was $11.8 million, down from the prior-year quarter figure of $63.8 million. Adjusted EBITDA declined to $66.4 million from $122.6 million recorded in the first quarter of 2018.

Segmental Performance

Sales in the North America segment were $474.7 million, marking a decline from the year-ago quarter figure of $499.2 million. In first-quarter 2019, the segment’s adjusted EBITDA was $57.6 million, marking a decline from $86.8 million recorded in the prior-year quarter.

Sales in the Europe segment were $254.6 million in the first quarter, down from $292.4 million in first-quarter 2018. The segment’s adjusted EBITDA was $9.4 million compared with $23 million in the prior-year quarter.

The Asia Pacific segment reported sales of $127.5 million in the reported quarter, down from $149.2 million in first-quarter 2018. The segment recorded adjusted EBITDA of $767,000 against loss of $13.5 million in first-quarter 2018.

The company’s South America segment reported sales of $23.2 million during the quarter under review, down from $26.6 million in first-quarter 2018. The segment witnessed loss of $1.4 million, up from the prior-year quarter’s loss of $597,000.

Financials

Cooper-Standard had $262.2 million of cash and cash equivalents as of Mar 31, 2019, compared with $264.9 million as of Dec 31, 2018. The company had long-term debt of $738.1 million as of Mar 31, 2019, compared with $729.8 million recorded as of Dec 31, 2018.

2019 Outlook

For 2019, the company anticipates sales of $3.2-$3.4 billion, down from the earlier $3.4-$3.6 billion. It expects adjusted EBITDA of $300-$340 million, which remained unchanged. Further, the company expects capital expenditure of $180-$190 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Cooper-Standard has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 looks promising. 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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