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Why Is Cooper-Standard (CPS) Down 28.7% Since Last Earnings Report?

Zacks Equity Research
Is (CZZ) Outperforming Other Basic Materials Stocks This Year?

It has been about a month since the last earnings report for Cooper-Standard (CPS). Shares have lost about 28.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper-Standard due for a breakout? 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 catalysts.

Cooper-Standard Q4 Earnings & Revenues Miss Estimates

Cooper-Standard reported adjusted earnings of $1.53 per share in fourth-quarter 2018, missing the Zacks Consensus Estimate of $2.12. Further, the bottom-line figure was lower than the year-ago quarter figure of $3.42 per share. Challenging market conditions in Asia and Europe, and increasing commodity costs impacted the company’s results.

Sales were $842 million, which missed the Zacks Consensus Estimate of $896.6 million. The year-ago figure was $938 million. The decline in sales was primarily due to unfavorable volume and mix, foreign exchange, and price adjustments, partly offset by positive impacts of acquisitions and divestitures.

During the reported quarter, adjusted net income was $27.5 million, down from the prior-year quarter figure of $63.6 million. Adjusted EBITDA declined to $76.4 million from $131.2 million recorded in the fourth quarter of 2017.

2018 Results

In 2018, the company’s adjusted net income was $160.7 million or $8.79 per share, a decline from $208 million or $11.08 per share.

The company’s sales were $3.63 billion in 2018 compared with $3.62 billion generated in the prior year.

Segmental Performance

Sales in the North America segment were $476.4 million, marking a decline from the year-ago quarter figure of $479.4 million. In fourth-quarter 2018, the segment’s profit was $51.3 million, marking a decline from $65.2 million recorded in the prior-year quarter.

Sales in the Europe segment were $230.2 million in the fourth quarter, down from $267.4 million in fourth-quarter 2017. The segment’s loss was $57.2 million against profit of $1.8 million in the prior-year quarter.

The Asia Pacific segment reported sales of $143.1 million in the reported quarter, down from $163.2 million in fourth-quarter 2017. The segment recorded loss of $68.6 million, down from loss of $1.1 million in fourth-quarter 2017.

The company’s South America segment reported sales of $22.3 million during the quarter under review, down from $27.9 million in fourth-quarter 2017.  The segment’s loss was $3.7 million, down from the prior-year quarter’s loss of $2.6 million.

Financials

Cooper-Standard had $265 million of cash and cash equivalents as of Dec 31, 2018, compared with $516 million as of Dec 31, 2017. The company had long-term debt of $730 million as of Dec 31, 2018, compared with $723.3 million recorded as of Dec 31, 2017.

2019 Outlook

For 2019, the company anticipates sales of $3.4-$3.6 billion and adjusted EBITDA of $300-$340 million. Further, the company expects capital expenditure of$180-$190 million.

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 -31.72% due to these changes.

VGM Scores

At this time, Cooper-Standard has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. 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. It's no surprise Cooper-Standard has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.



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