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Meritor (MTOR) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Meritor (MTOR) closed at $18.62, marking a -0.8% move from the previous day. This move lagged the S&P 500's daily loss of 0.49%. Elsewhere, the Dow lost 0.59%, while the tech-heavy Nasdaq lost 0.8%.

Coming into today, shares of the supplier of parts for commercial vehicles and heavy equipment had gained 5.75% in the past month. In that same time, the Auto-Tires-Trucks sector gained 6.9%, while the S&P 500 gained 3%.

Investors will be hoping for strength from MTOR as it approaches its next earnings release. In that report, analysts expect MTOR to post earnings of $0.68 per share. This would mark a year-over-year decline of 17.07%. Meanwhile, our latest consensus estimate is calling for revenue of $1.05 billion, down 3.08% from the prior-year quarter.

MTOR's full-year Zacks Consensus Estimates are calling for earnings of $3.72 per share and revenue of $4.41 billion. These results would represent year-over-year changes of +22.77% and +5.47%, respectively.

It is also important to note the recent changes to analyst estimates for MTOR. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. MTOR is currently a Zacks Rank #2 (Buy).

Looking at its valuation, MTOR is holding a Forward P/E ratio of 5.05. This represents a discount compared to its industry's average Forward P/E of 9.56.

The Automotive - Original Equipment industry is part of the Auto-Tires-Trucks sector. This group has a Zacks Industry Rank of 188, putting it in the bottom 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow MTOR in the coming trading sessions, be sure to utilize Zacks.com.

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