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Sensata (ST) Up 9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata 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.
Sensata’s Q1 Earnings Surpass Estimates
Sensata reported first-quarter 2024 adjusted earnings per share (EPS) of 89 cents compared with 92 cents reported a year ago. The bottom line surpassed the Zacks Consensus Estimate of 86 cents.
Quarterly revenues aggregated $1,006.7 million, up 0.9% year over year. The top line beat the consensus estimate by 1.9%. Organic growth of 2.3% was partly offset by unfavorable forex exchange movement.
The company continues to make strides in its electrification business. Management highlighted that in the past three years, it won more than $2.3 billion in new business, with $1.3 billion coming from the electrification business.
Segmental Results
In the first quarter of 2024, management transferred the Insight segment from the Performance Sensing segment to “Other” category.
Performance Sensing revenues (70.9% of total revenues) increased 6.8% year over year to $713.3 million. The topline performance gained from content growth across Automotive and Heavy vehicle off-road. This was partly offset by unfavorable foreign exchange movement. Segmental operating income was $185.1 million compared with $169.1 million in the prior-year quarter.
Sensing Solutions revenues (25.6%) were $257.8 million, down 9% from the previous year. The year-over-year slowdown was primarily due to industrial down-cycle and unfavorable forex movement. This was partially balanced by growth in the Aerospace category. Industrial business (which includes HVAC appliances and General Industrial) revenue growth remains under pressure owing to inventory destocking and the sluggish construction markets.
Other revenues (3.5%) were $35.6 million, down 24.3% from the prior-year period.
Other Details
Total operating income was $144.8 million compared with $148.8 million in the year-ago quarter.
Total operating expenses were $861.9 million, up from $849.3 million reported in the prior-year quarter, primarily due to higher cost of revenue and administrative expenses. Adjusted operating income was $188.5 million, down 2.3% from a year ago. The downward movement was mainly caused by unfavorable movements in foreign currency.
Adjusted EBITDA totaled $223.8 million in the quarter, up from $225.5 million in the previous year’s quarter.
Cash Flow & Liquidity
During the quarter, Sensata generated $106.5 million of net cash from operating activities compared with $96.9 million in the prior-year quarter. Free cash flow was $64.4 million compared with $60 million a year ago.
As of Mar 31, 2024, the company had $460.4 million in cash and cash equivalents and $3,375.5 million of net long-term debt compared with $508 million and $3,373.9 million, respectively, as of Dec 31, 2023.
In the reported quarter, Sensata returned $28.1 million to shareholders via a quarterly dividend of $18.1 million and repurchased shares worth $10.1 million.
Guidance
Sensata provided guidance for the second quarter of 2024. For the quarter, the company projects revenues in the band of $1,025-$1,055 million, indicating a decline of 3-1%. Adjusted operating income is expected to be $192-$202 million, indicating a year-over-year decline of 7% to 2%.
Adjusted EPS is estimated to be 89-95 cents, suggesting a decline of 8-2%. Adjusted net income is anticipated in the $134-$144 million range, indicating a decrease of 10% to 4%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Sensata has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Sensata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Sensata (ST) Up 9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sensata 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.
Sensata’s Q1 Earnings Surpass Estimates
Sensata reported first-quarter 2024 adjusted earnings per share (EPS) of 89 cents compared with 92 cents reported a year ago. The bottom line surpassed the Zacks Consensus Estimate of 86 cents.
Quarterly revenues aggregated $1,006.7 million, up 0.9% year over year. The top line beat the consensus estimate by 1.9%. Organic growth of 2.3% was partly offset by unfavorable forex exchange movement.
The company continues to make strides in its electrification business. Management highlighted that in the past three years, it won more than $2.3 billion in new business, with $1.3 billion coming from the electrification business.
Segmental Results
In the first quarter of 2024, management transferred the Insight segment from the Performance Sensing segment to “Other” category.
Performance Sensing revenues (70.9% of total revenues) increased 6.8% year over year to $713.3 million. The topline performance gained from content growth across Automotive and Heavy vehicle off-road. This was partly offset by unfavorable foreign exchange movement. Segmental operating income was $185.1 million compared with $169.1 million in the prior-year quarter.
Sensing Solutions revenues (25.6%) were $257.8 million, down 9% from the previous year. The year-over-year slowdown was primarily due to industrial down-cycle and unfavorable forex movement. This was partially balanced by growth in the Aerospace category. Industrial business (which includes HVAC appliances and General Industrial) revenue growth remains under pressure owing to inventory destocking and the sluggish construction markets.
Other revenues (3.5%) were $35.6 million, down 24.3% from the prior-year period.
Other Details
Total operating income was $144.8 million compared with $148.8 million in the year-ago quarter.
Total operating expenses were $861.9 million, up from $849.3 million reported in the prior-year quarter, primarily due to higher cost of revenue and administrative expenses. Adjusted operating income was $188.5 million, down 2.3% from a year ago. The downward movement was mainly caused by unfavorable movements in foreign currency.
Adjusted EBITDA totaled $223.8 million in the quarter, up from $225.5 million in the previous year’s quarter.
Cash Flow & Liquidity
During the quarter, Sensata generated $106.5 million of net cash from operating activities compared with $96.9 million in the prior-year quarter. Free cash flow was $64.4 million compared with $60 million a year ago.
As of Mar 31, 2024, the company had $460.4 million in cash and cash equivalents and $3,375.5 million of net long-term debt compared with $508 million and $3,373.9 million, respectively, as of Dec 31, 2023.
In the reported quarter, Sensata returned $28.1 million to shareholders via a quarterly dividend of $18.1 million and repurchased shares worth $10.1 million.
Guidance
Sensata provided guidance for the second quarter of 2024. For the quarter, the company projects revenues in the band of $1,025-$1,055 million, indicating a decline of 3-1%. Adjusted operating income is expected to be $192-$202 million, indicating a year-over-year decline of 7% to 2%.
Adjusted EPS is estimated to be 89-95 cents, suggesting a decline of 8-2%. Adjusted net income is anticipated in the $134-$144 million range, indicating a decrease of 10% to 4%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Sensata has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, Sensata has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.