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Why Is Sensata (ST) Up 1.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 1.7% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Sensata's Q3 Earnings Meet Estimates
Sensata reported third-quarter 2024 adjusted earnings per share (EPS) of 86 cents compared with 91 cents a year ago. The bottom line matched the Zacks Consensus Estimate.
Revenues for the quarter reached $982.8 million, down 1.8% from a year ago. The top line missed the consensus estimate by 0.2%.
Segmental Results
Performance Sensing revenues (67.1% of total revenues) fell 5.3% year over year to $659.7 million. The top line fell mainly due to local original equipment manufacturers (OEMs) gaining market share from multinational companies in China, partially offset by growth in the Heavy Vehicle & Off Road sector, particularly in North American and European on-road trucks. Segmental adjusted operating income was $161.9 million compared with $177.6 million in the prior-year quarter.
Sensing Solutions revenues (27.9%) were $274.4 million, down 0.3% from the previous year. The considerable year-over-year decrease was due to continued destocking and a sluggish housing construction market adversely impacting the industrial sector. However, the company anticipates future growth, particularly with its A2L leak detection sensor, which is gaining traction in a growing market. Moreover, Sensata's Dynapower business recently received approval for its fifth-generation compact power systems, providing dual-purpose performance for hydrogen production and fuel cells. Segmental adjusted operating income was $81 million compared with $80.7 million in the prior-year quarter.
Other revenues (5%) were $48.8 million, up 66.4% from the prior-year period.
Other Details
Total operating loss was $199.2 million against operating income of $116.3 million in the year-ago quarter. This loss is attributed to a $150 million good will impairment charge for the Dynapower business, $141 million in restructuring expenses linked to the sale of the Insights business and product exits and $27 million in costs tied to product lifecycle management.
Total operating expenses were $1182.1 million, up from $885 million reported in the prior-year quarter. Adjusted operating income was $188.4 million, declining 1.7% year over year. Adjusted EBITDA totaled $217.6 million in the quarter, down from $228.3 million in the previous year’s quarter.
Cash Flow & Liquidity
During the quarter, Sensata generated $130.9 million of net cash from operating activities compared with $138.9 million in the prior-year quarter. Free cash flow was $91.3 million compared with $87.2 million a year ago.
As of Sept. 30, 2024, the company had $506.2 million in cash and cash equivalents and $3,174.4 of net long-term debt compared with $1,033 million and $3,170.8 million, respectively, as of June 30, 2024.
In the third quarter of 2024, Sensata returned approximately $55.4 million to shareholders, which included $37.2 million spent on repurchasing shares and $18.1 million paid out in dividends of 12 cents per share, on Aug. 28, 2024.
Guidance
Sensata has revised its guidance for the fourth quarter of 2024. This can be attributed to the $50 million sale of the Insights business in the third quarter, the exit of underperforming products totaling about $20 million and reduced production forecasts in the automotive and heavy vehicle industries with OEMs managing rising inventory levels.
For the quarter, the company projects revenues in the band of $870-$900 million, indicating a decline of 11-8%. Adjusted operating income is expected to be $167.2-$175.2 million, implying a year-over-year decrease of 11% to 7%.
Adjusted EPS is estimated to be 71-76 cents, suggesting a decline of 17-12%. Adjusted net income is anticipated in the $107-$115 million range, indicating a decrease of 18% to 12%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.96% due to these changes.
VGM Scores
At this time, Sensata has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 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. It's no surprise Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Watts Water (WTS - Free Report) , has gained 7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Watts Water reported revenues of $543.6 million in the last reported quarter, representing a year-over-year change of +7.8%. EPS of $2.03 for the same period compares with $2.04 a year ago.
For the current quarter, Watts Water is expected to post earnings of $1.93 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Watts Water. Also, the stock has a VGM Score of A.
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Why Is Sensata (ST) Up 1.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Sensata (ST - Free Report) . Shares have added about 1.7% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Sensata's Q3 Earnings Meet Estimates
Sensata reported third-quarter 2024 adjusted earnings per share (EPS) of 86 cents compared with 91 cents a year ago. The bottom line matched the Zacks Consensus Estimate.
Revenues for the quarter reached $982.8 million, down 1.8% from a year ago. The top line missed the consensus estimate by 0.2%.
Segmental Results
Performance Sensing revenues (67.1% of total revenues) fell 5.3% year over year to $659.7 million. The top line fell mainly due to local original equipment manufacturers (OEMs) gaining market share from multinational companies in China, partially offset by growth in the Heavy Vehicle & Off Road sector, particularly in North American and European on-road trucks. Segmental adjusted operating income was $161.9 million compared with $177.6 million in the prior-year quarter.
Sensing Solutions revenues (27.9%) were $274.4 million, down 0.3% from the previous year. The considerable year-over-year decrease was due to continued destocking and a sluggish housing construction market adversely impacting the industrial sector. However, the company anticipates future growth, particularly with its A2L leak detection sensor, which is gaining traction in a growing market. Moreover, Sensata's Dynapower business recently received approval for its fifth-generation compact power systems, providing dual-purpose performance for hydrogen production and fuel cells. Segmental adjusted operating income was $81 million compared with $80.7 million in the prior-year quarter.
Other revenues (5%) were $48.8 million, up 66.4% from the prior-year period.
Other Details
Total operating loss was $199.2 million against operating income of $116.3 million in the year-ago quarter. This loss is attributed to a $150 million good will impairment charge for the Dynapower business, $141 million in restructuring expenses linked to the sale of the Insights business and product exits and $27 million in costs tied to product lifecycle management.
Total operating expenses were $1182.1 million, up from $885 million reported in the prior-year quarter. Adjusted operating income was $188.4 million, declining 1.7% year over year.
Adjusted EBITDA totaled $217.6 million in the quarter, down from $228.3 million in the previous year’s quarter.
Cash Flow & Liquidity
During the quarter, Sensata generated $130.9 million of net cash from operating activities compared with $138.9 million in the prior-year quarter. Free cash flow was $91.3 million compared with $87.2 million a year ago.
As of Sept. 30, 2024, the company had $506.2 million in cash and cash equivalents and $3,174.4 of net long-term debt compared with $1,033 million and $3,170.8 million, respectively, as of June 30, 2024.
In the third quarter of 2024, Sensata returned approximately $55.4 million to shareholders, which included $37.2 million spent on repurchasing shares and $18.1 million paid out in dividends of 12 cents per share, on Aug. 28, 2024.
Guidance
Sensata has revised its guidance for the fourth quarter of 2024. This can be attributed to the $50 million sale of the Insights business in the third quarter, the exit of underperforming products totaling about $20 million and reduced production forecasts in the automotive and heavy vehicle industries with OEMs managing rising inventory levels.
For the quarter, the company projects revenues in the band of $870-$900 million, indicating a decline of 11-8%. Adjusted operating income is expected to be $167.2-$175.2 million, implying a year-over-year decrease of 11% to 7%.
Adjusted EPS is estimated to be 71-76 cents, suggesting a decline of 17-12%. Adjusted net income is anticipated in the $107-$115 million range, indicating a decrease of 18% to 12%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.96% due to these changes.
VGM Scores
At this time, Sensata has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. 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 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. It's no surprise Sensata has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Sensata belongs to the Zacks Instruments - Control industry. Another stock from the same industry, Watts Water (WTS - Free Report) , has gained 7% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.
Watts Water reported revenues of $543.6 million in the last reported quarter, representing a year-over-year change of +7.8%. EPS of $2.03 for the same period compares with $2.04 a year ago.
For the current quarter, Watts Water is expected to post earnings of $1.93 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Watts Water. Also, the stock has a VGM Score of A.