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TRW Automotive Attains 52-Week High

Zacks Equity Research

Shares of TRW Automotive Holdings Corp. (TRW) hit new 52-week high of $68.93 on Jul 5, which is above its previous level of $68.38, and closed at $68.73 on the same day. The closing price represented a strong one-year return of 81.4% and year-to-date return of 25.0%.

TRW Automotive, headquartered in Michigan, is a leading manufacturer of advanced technology products and services for the automotive markets. The company operates in 27 countries through its subsidiaries. It has a market cap of $8.3 billion. Average volume of shares traded over the last three months stood at approximately 944.4K.

Shares of the company started escalating due to improving fundamentals in the automotive components supplying market. However, the company failed to impress investors with its first quarter results on Apr 30.

TRW posted earnings of $1.51 per share in the first quarter of 2013, topping the Zacks Consensus Estimate of $1.46. However, earnings fell 6.8% from $1.62 per share in the first quarter of 2012 due to lower operating income on the back of a higher mix of lower margin business and planned increases in costs to support future growth. Net earnings dipped 10.4% to $189 million from $211 million a year ago. All of them excluded special items.      

Revenues in the quarter were almost flat at $4.2 billion as the impact of increasing demand for TRW’s innovative technologies and higher vehicle production volumes in China were offset by significantly lower vehicle production in Europe.

U.S. auto sales continue to improve driven by continued macroeconomic recovery, aging vehicles on the U.S. roads and strong demand for commercial vehicles from businesses. Seasonally adjusted annual sales rate in June this year reached its highest level of 15.9 million units since November 2007.

Currently, shares of TRW retain a Zacks Rank #3, which translates to a short-term rating (1–3 months) of Hold. Some other stocks that are performing well in the industry include Visteon Corp. (VC) and Magna International Inc. (MGA), each with a Zacks Rank #1 (Strong Buy), and Meritor Inc. (MTOR) with a Zacks Rank #2 (Buy).

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