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TRW Automotive Hits 52-Week High

Zacks Equity Research

Shares of TRW Automotive Holdings Corp. (TRW) hit a new 52-week high of $65.42 on Jun 14, which is above its previous level of $65.23, and closed at $64.71 on the same day. The closing price represented a solid one-year return of 76.5% and year-to-date return of 17.7%.

TRW Automotive, headquartered in Mich., 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 $7.8 billion. Average volume of shares traded over the last three months stood at approximately 987.25K.

Shares of the company started escalating due to improving fundamentals in the automotive 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.

Adjusted operating profits dipped 12.9% to $290 million from $333 million in the prior year period. Earnings before interest, taxes, depreciation and amortization and special items decreased 9.8% to $396 million in the quarter from $439 million a year ago.

Auto sales in the U.S. grew 8.2% to 1.44 million units in May, while it improved 10.9% to 15.3 million vehicles on a seasonally adjusted rate (:SAAR) basis. The improvement was primarily due to the continued macroeconomic recovery, aging vehicles on the U.S. roads and strong demand for commercial vehicles from businesses.

Currently, shares of TRW retain a Zacks Rank #3 (Hold). Some other stocks that are performing well in the industry include Visteon Corp. (VC), Lear Corp. (LEA) and Magna International Inc. (MGA). They carry a Zacks Rank #1 (Strong Buy).

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