Standard Motor Products (SMP) Up 1.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Standard Motor Products (SMP). Shares have added about 1.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Standard Motor Products due for a pullback? 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 drivers.
Standard Motor Q2 Earnings Miss Estimates
Standard Motor reported second-quarter 2023 adjusted earnings of 84 cents per share, which declined from 93 cents in the prior-year quarter and lagged the Zacks Consensus Estimate of 97 cents. Lower-than-anticipated revenues from Vehicle Control and Temperature control units largely resulted in the underperformance.
Total revenues inched down from $359 million in the second quarter of 2022 to $353.1 million in the quarter under review. The reported figure lagged the consensus mark of $372 million. Gross profit rose to $101.3 million from the year-ago quarter’s $96.4 million. Operating income fell to $27.2 million from $27.9 million reported in the year-ago quarter.
Segmental Results
During the reported quarter, revenues from the Vehicle Control segment totaled $183.8 million, down 1% year over year, and missed our estimate of $194 million. Customer bankruptcy had the greatest influence on this particular segment, resulting in a 2.2% decline during the quarter. Operating income was $19.4 million, up from the prior-year quarter’s $16 million.
During the reported quarter, revenues from the Engineered Solutions segment totaled $72.2 million, up 6% year over year, and topped our estimate of $69 million on stronger-than-expected demand from existing customers as well as new business wins. Operating income was $6.2 million, up from the prior-year quarter’s $5.1 million.
Revenues from the Temperature Control segment came in at $97.1 million, declining from the year-ago quarter’s $105.6 million as well as missing our projection of $107.6 million. Against a backdrop of challenging comparisons to the previous year, cooler and wetter spring weather adversely impacted the demand for this seasonal product category. The segment registered an operating income of $5.9 million, down from $10.5 million reported in the year-ago period.
Operating loss from the Other segment was $4.05 million, wider than $3.79 million recorded in the year-ago quarter.
Financial Position
Standard Motor had $23 million in cash as of Jun 30, 2023, compared with $21.1 million as of Dec 31, 2022. Long-term debt totaled $164.5 million at quarter end. Net cash outflow from operating activities totaled $18.9 million in the second quarter of 2023. SG&A expenses flared up 7.7% to $73.8 million.
The company approved a quarterly dividend of 29 cents per share, which will be paid out on Sep 1, 2023 to stockholders of record as of Aug 15, 2023.
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For full-year 2023, the company expects sales to grow by a low single-digit number. Standard Motor has revised its outlook for adjusted EBITDA at around 9.5% of total revenues, which is down from the previous estimate of roughly 10%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -11.64% due to these changes.
VGM Scores
Currently, Standard Motor Products has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. 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 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, Standard Motor Products has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Standard Motor Products, Inc. (SMP) : Free Stock Analysis Report
