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A month has gone by since the last earnings report for Adient (ADNT). Shares have added about 3.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Adient due for a pullback? 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 drivers.
Adient’s Q4 Earnings Surpass, Sales Lag Estimates
Adient reported adjusted earnings per diluted share of $1.15 in fourth-quarter fiscal 2020, beating the Zacks Consensus Estimate of 96 cents. This outperformance can be attributed to the higher-than-anticipated revenues from the company’s Americas segment. Better-than-expected contribution from each segment also drove the results.
Moreover, the bottom line compares favorably with the year-ago earnings of 63 cents per share, marking a year-over-year surge of 82.5%.
During the reported quarter, Adient generated net sales of $3,597 million, down from the $3,921 million recorded in the prior-year quarter, due to disappointing global production volumes. The top-line figure also missed the Zacks Consensus Estimate of $3,644 million.
Adient currently operates through three reportable segments — Americas, which includes North America and South America; Europe, Middle East, and Africa (EMEA); and Asia Pacific/China (Asia).
For the reported quarter, the Americas segment recorded revenues of $1,796 million, down from the $1,925 million generated in the year-ago period. The revenue figure, however, surpassed the Zacks Consensus Estimate of $1,782 million. Adient posted adjusted EBITDA of $111 million in the fiscal fourth quarter, up from the $64 million recorded in the prior-year period, primarily on lower selling, general and administration (SG&A) costs as well as positive business performance, partially offset by the negative impact of lower volumes. The metric also topped the consensus mark of $79 million.
For the fiscal fourth quarter, the EMEA segment registered revenues of $1,398 million, dropping 7.1% year over year. However, the reported figure marginally surpassed the consensus mark of $1,396 million. Its quarterly EBITDA came in at $84 million, higher than the prior-year quarter’s profit of $47 million. This upside resulted from decreased SG&A costs and a positive business performance, partially negated by the adverse impact of dismal volumes. The metric also topped the consensus mark of $51 million.
For the September-end quarter, revenues in the Asia segment came in at $460 million compared with the year-earlier quarter’s $558 million. The figure, moreover, missed the Zacks Consensus Estimate of $497 million. The company’s adjusted EBITDA was $113 million compared with the $126 million reported in fourth-quarter fiscal 2019 on lackluster industry volumes, slightly muted by rise in seating equity income and reduced SG&A costs. However, the metric topped the consensus mark of $105 million.
Adient had cash and cash equivalents of $1,692 million as of Sep 30, 2020, compared with $924 million as of Sep 30, 2019. As of the same date, long-term debt amounted to $4,097 million, up from $3,708 billion as of Sep 30, 2019. Capital expenditure declined to $68 million in the fiscal fourth quarter from the $118 million recorded in the prior-year quarter.
Fiscal 2020 Highlights
For the fiscal year, the company registered adjusted loss per diluted share of 4 cents compared with the earnings of $1.63 reported in the previous fiscal year.
Net sales for fiscal 2020 came in at $12,670 million, down from the $16,526 million reported in the prior fiscal year.
Fiscal 2021 Outlook
For fiscal 2021, Adient expects revenues of $14.6-$15 billion. Adjusted EBITDA is anticipated in the band of $1-$1.1 billion. Moreover, the company projects free cash flow of upto 100 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 36.23% due to these changes.
Currently, Adient has a great 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 top 40% 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.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Adient has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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