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Standard Motor Products (SMP) Down 6.9% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

A month has gone by since the last earnings report for Standard Motor Products (SMP). Shares have lost about 6.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Standard Motor Products 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 catalysts.

Standard Motor Q2 Earnings & Revenues Top Estimates

Standard Motor reported adjusted earnings of 92 cents per share in second-quarter 2019, beating the Zacks Consensus Estimate of 80 cents. Further, the bottom line was higher than the prior-year quarter figure of 74 cents per share.

During the quarter under review, earnings from continuing operations were $20.6 million compared with $16.8 million recorded in the prior-year quarter. Strong performance by the operating divisions drove the company’s earnings in the quarter.

During the reported quarter, total revenues increased to $305.2 million, which surpassed the Zacks Consensus Estimate of $299 million. The year-ago figure was $286.6 million.

Gross profit increased to $88.9 million from $81.3 million in the year-ago quarter. Operating income increased to $27.7 million from $23.4 million in the year-ago quarter.

Segmental Results

In the reported quarter, revenues from the Engine Management segment rose 7.2% year over year to $218 million. Operating income was $26.4 million (12.1% of sales) compared with $23.2 million (11.4% of sales) in the prior-year quarter.

Revenues at the Temperature Control segment increased 5% year over year to $84.4 million. The segment recorded operating income of $7.2 million (8.5% of sales) compared with $5.1 million (6.3% of sales) in the second quarter of 2018.

Revenues at the All Other segment rose to $3.1 million from $2.9 million a year ago. The segment registered operating loss of $5.1 million, wider than loss of $4.7 million recorded in the second quarter of 2018.

Financial Position

Standard Motor had cash and cash equivalents of $17.4 million as of Jun 30, 2019, compared with $18.6 million as of Jun 30, 2018. Other long-term debt was $153,000 as of Jun 30, 2019, compared with $153,000 as of Dec 31, 2018.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Standard Motor Products has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Standard Motor Products has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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