Why Is Standard Motor (SMP) Down 8% Since Its Last Earnings Report?
A month has gone by since the last earnings report for Standard Motor Products, Inc. SMP. Shares have lost about 8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is SMP 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.
Standard Motor’s Q4 Earnings & Revenues Beat Estimates
Standard Motor’s Fourth-quarter 2017 adjusted earnings of 54 cents per share surpassed the Zacks Consensus Estimate of 39 cents. Also, the bottom line improved from the prior-year quarter figure of 42 cents per share.
During the quarter, loss from continuing operations were $8.1 million, compared with earnings of $8.8 million in the prior-year quarter.
Total revenue also increased to $240 million from $229.8 million a year ago. The top line too surpassed of the Zacks Consensus Estimate of $229 million.
Gross profit in the fourth quarter of 2017 increased to $69.3 million from $66.8 million in the year-ago quarter. Operating income also rose to $16.1 million from $12.6 million in the year-ago quarter.
For the year 2017, earnings came in at $2.83, higher than 2016 figure of $2.77 per share. In 2017, total revenue also increased to $1.12 billion from $1.06 billion a year ago.
Segment Results
During the quarter, revenues at the Engine Management segment rose to $198 million in the reported quarter from $185.2 million a year ago.
Operating profit was $22.8 million (11.5% of sales) compared with $18.1 million (9.8% of sales) in the prior-year quarter.
Revenues at the Temperature Control segment decreased to $40.3 million from $42.7 million a year ago. The segment recorded an operating profit of $50,000 (0.1% of sales) compared with a profit of $1.3 million (2.9% of sales) in the fourth quarter of 2016.
Revenues at the All Other segment slightly decreased to $1.72 million from $1.92 million a year ago. The segment registered an operating loss of $4.8 million, narrower than $5.2 million in the fourth quarter of 2016.
Financial Position
Standard Motor had cash and cash equivalents of $17.3 million as of Dec 31, 2017 compared with $19.8 million as of Dec 31, 2016. Long-term debt of the company was $79,000 as of Dec 31, 2017 compared with $120,000 as of Dec 31, 2016.
Business Update
At the end of November, Standard Motor entered into a joint venture with Foshan Guangdong Automotive Air Conditioning Co. This JV is in sync with its strategy to develop Temperature Control business in China.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Standard Motor Products, Inc. Price and Consensus
Standard Motor Products, Inc. Price and Consensus | Standard Motor Products, Inc. Quote
VGM Scores
At this time, SMP has a nice Growth Score of B and a grade with the same score on the momentum front. The stock was also 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, SMP has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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