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Tenneco (TEN) Rides on Organic Growth Amid Pricing Pressure

Zacks Equity Research

On Sep 12, we issued an updated research report on Tenneco Inc. TEN.
This Lake Forest, IL-based company is engaged in manufacturing and supplying emission control, ride control systems and systems for light, plus commercial and specialty vehicle applications. The company caters to both automotive original equipment manufacturers as well as aftermarket consumers.

Over the past 30 days, the Zacks Consensus Estimate for current-quarter and full-year earnings has remained unchanged at $1.58 per share and $6.68 per share, respectively.

Tenneco projects total revenue to increase about 7% year over year on a constant currency basis in third-quarter 2017. The company is also of the opinion that organic revenue growth will be driven by Clean Air and Ride Performance content on top-selling light vehicle platforms globally. Total revenue in 2017 is anticipated to rise 6% year over year on a constant-currency basis.

However, pricing pressure from original equipment manufacturers (“OEM”) is a concern for Tenneco. The company’s dependence on a few customers in the OEM segment makes it susceptible to price movement. Tenneco has underperformed the industry it belongs to over the last three months. The company’s shares have lost 3.2% over the period, compared with a 9.4% increase recorded by the industry.

Tenneco carries a Zacks Rank #3 (Hold).

A few top-ranked automobile stocks are Toyota Motor Corporation TM, Daimler AG DDAIF and Volkswagen AG VLKAY. While Toyota and Daimler sport a Zacks Rank #1 (Strong Buy), Volkswagen carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Toyota has a long-term growth rate of 7%.

Daimler has an expected long-term earnings growth rate of 2.8%

Volkswagen has an expected long-term earnings growth rate of 8.9%

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