Why Is Adient (ADNT) Up 5.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Adient (ADNT). Shares have added about 5.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Adient Q1 Earnings Miss Estimates, Guidance Revised
Adient delivered adjusted earnings per share (EPS) of 31 cents for the first quarter of fiscal 2024. Earnings fell from 34 cents recorded in the year-ago period and also missed the Zacks Consensus Estimate of 47 cents. In the reported quarter, the company generated net sales of $3.66 billion, which decreased 1% year over year and missed the Zacks Consensus Estimate of $3.72 billion.
Segmental Performance
Adient currently operates through three reportable segments — the Americas, including North America and South America; Europe, which includes the Middle East and Africa (EMEA); and Asia Pacific/China (Asia).
In the reported quarter, the Americas segment recorded revenues of $1.65 billion, which declined 4% from the year-ago period but beat the Zacks Consensus Estimate of $1.64 billion. The segment recorded an adjusted EBITDA of $80 million, up from $69 million recorded in the prior-year period and topped the Zacks Consensus Estimate of $57 million, driven by sales outperformance.
In the fiscal first quarter, the EMEA segment registered revenues of $1.27 billion, which increased 7.6% year over year and exceeded the Zacks Consensus Estimate of $1.25 billion. The segment recorded EBITDA of $45 million in the quarter under review, which was higher than $28 million generated in the year-ago period. It also outpaced the Zacks Consensus Estimate of $40.99 million on the back of improved business performance, forex benefits and increased net commodities.
In the quarter, revenues in the Asia segment came in at $770 million, down 6.2% year over year and missed the Zacks Consensus Estimate of $844. The segment’s adjusted EBITDA fell 17.4% year over year to $114 million due to the end of production of a few programs and the launch of others, and the timing of recoveries.
Financial Position
Adient had cash and cash equivalents of $990 million as of Dec 31, 2023 compared with $1.11 billion as of Sep 30, 2023.
Long-term debt amounted to $2,403 million in the reported quarter, up from $2,401 million as of Sep 30, 2023.
Capital expenditures totaled $55 million in the fiscal first quarter of 2024 compared with $61 million in the prior-year quarter.
During the quarter under review, Adient repurchased nearly three million shares for $100 million.
Revised Guidance 2024
Adient envisions fiscal 2024 revenues in the range of $15.40-$15.50 billion, down from the previous guidance of $15.60-$15.70 billion. Adjusted EBITDA is estimated to be $985 million, down from the prior guidance of $1.01 billion. Equity income and capex are projected between $70 million and $310 million, respectively, the same as the previous guidance. Free cash flow is estimated to be $300 million. Interest expenses and cash tax are estimated between $185 million and $105 million, respectively.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.17% due to these changes.
VGM Scores
At this time, Adient has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Adient has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Adient is part of the Zacks Automotive - Original Equipment industry. Over the past month, Lear (LEA), a stock from the same industry, has gained 6.7%. The company reported its results for the quarter ended December 2023 more than a month ago.
Lear reported revenues of $5.84 billion in the last reported quarter, representing a year-over-year change of +8.8%. EPS of $3.03 for the same period compares with $2.81 a year ago.
For the current quarter, Lear is expected to post earnings of $3.25 per share, indicating a change of +16.9% from the year-ago quarter. The Zacks Consensus Estimate has changed -4.2% over the last 30 days.
Lear has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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