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Tenneco (TEN) Down 3.6% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Tenneco Inc. (TEN - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenneco Earnings and Revenues Beat Estimates in Q1
Tenneco recently reported first-quarter 2017 results, wherein adjusted earnings per share of $1.53 outpaced the Zacks Consensus Estimate of $1.41. Moreover, earnings increased 31% from $1.17 recorded in the prior-year quarter.
Adjusted net income went up 24% to $83 million from $67 million a year ago.
Reportedly, Tenneco’s net income was a first quarter record at $63 million or $1.16 per share compared with $57 million or $0.99 recorded in the year-ago quarter.
Revenues rose 7% year over year to $2.29 billion, surpassing the Zacks Consensus Estimate of $2.24 billion. The year-over-year improvement in the top line was aided by strong revenues at both Clean Air and Ride Performance product lines. Excluding currency effects, revenues rose 9% to $2.33 billion.
Global aftermarket revenues were almost on par with the year-ago quarter figure. Commercial truck increased 15%, while off-highway revenues were on par with year-ago figures due to weak industry production. Also light vehicle revenues rose 11% owing to company’s global platform position.
Adjusted EBIT (earnings before interest, taxes and non-controlling interests) increased 11% to a first quarter record of $153 million from $138 million a year ago. This upside was driven by leveraging strong light vehicle volumes, strong commercial truck growth and continuing operational efficiencies. Adjusted EBIT margin was 6.7% compared to 6.5% in the year-ago level.
Segment Results
Revenues from the Clean Air division rose 6.7% to $1.6 billion from $1.5 billion a year ago. Adjusted EBIT increased to $119 million from $111 million in the prior-year quarter.
Revenues from the Ride Performance division rose to $661 million from $621 million a year ago. Adjusted EBIT decreased to $60 million from $63 million in the year-ago quarter.
Financial Position
Tenneco had cash and cash equivalents of $341 million as of Mar 31, 2017, down from $347 million as of Dec 31, 2016. Long-term debt was $1.41 billion as of Mar 31, 2017, compared with $1.29 billion as of Dec 31, 2016.
In the reported quarter, cash used by operating activities was $9 million compared with $29 million used in the prior-year quarter.
Share Repurchase
In the first quarter of 2017, the company bought back 240,000 shares for $16 million.
Outlook
Total revenue is expected to improve 5% year over year on a constant currency basis in second-quarter 2017. Also, the company anticipates roughly 2% currency headwind in the second quarter.
Management believes that the organic revenue growth will be driven by Clean Air and Ride Performance content on top-selling light vehicle platforms globally, continued strong commercial truck growth and a steady contribution from the global aftermarket.
Total revenue is also expected to improve 5% year over year on a constant currency basis in 2017. The company also expects annual margins to improve year over year in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter compared to three lower.
At this time, Tenneco's stock has an average Growth Score of 'C'. However, its Momentum is doing a lot better with an 'A'. Following the exact same course, 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.
Based on our scores, the stock is equally suitable for value and momentum investors while growth investors may want to look elsewhere.
Outlook
While estimates have been broadly trending upward for the stock, the magnitude of these revisions is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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Tenneco (TEN) Down 3.6% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Tenneco Inc. (TEN - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Tenneco Earnings and Revenues Beat Estimates in Q1
Tenneco recently reported first-quarter 2017 results, wherein adjusted earnings per share of $1.53 outpaced the Zacks Consensus Estimate of $1.41. Moreover, earnings increased 31% from $1.17 recorded in the prior-year quarter.
Adjusted net income went up 24% to $83 million from $67 million a year ago.
Reportedly, Tenneco’s net income was a first quarter record at $63 million or $1.16 per share compared with $57 million or $0.99 recorded in the year-ago quarter.
Revenues rose 7% year over year to $2.29 billion, surpassing the Zacks Consensus Estimate of $2.24 billion. The year-over-year improvement in the top line was aided by strong revenues at both Clean Air and Ride Performance product lines. Excluding currency effects, revenues rose 9% to $2.33 billion.
Global aftermarket revenues were almost on par with the year-ago quarter figure. Commercial truck increased 15%, while off-highway revenues were on par with year-ago figures due to weak industry production. Also light vehicle revenues rose 11% owing to company’s global platform position.
Adjusted EBIT (earnings before interest, taxes and non-controlling interests) increased 11% to a first quarter record of $153 million from $138 million a year ago. This upside was driven by leveraging strong light vehicle volumes, strong commercial truck growth and continuing operational efficiencies. Adjusted EBIT margin was 6.7% compared to 6.5% in the year-ago level.
Segment Results
Revenues from the Clean Air division rose 6.7% to $1.6 billion from $1.5 billion a year ago. Adjusted EBIT increased to $119 million from $111 million in the prior-year quarter.
Revenues from the Ride Performance division rose to $661 million from $621 million a year ago. Adjusted EBIT decreased to $60 million from $63 million in the year-ago quarter.
Financial Position
Tenneco had cash and cash equivalents of $341 million as of Mar 31, 2017, down from $347 million as of Dec 31, 2016. Long-term debt was $1.41 billion as of Mar 31, 2017, compared with $1.29 billion as of Dec 31, 2016.
In the reported quarter, cash used by operating activities was $9 million compared with $29 million used in the prior-year quarter.
Share Repurchase
In the first quarter of 2017, the company bought back 240,000 shares for $16 million.
Outlook
Total revenue is expected to improve 5% year over year on a constant currency basis in second-quarter 2017. Also, the company anticipates roughly 2% currency headwind in the second quarter.
Management believes that the organic revenue growth will be driven by Clean Air and Ride Performance content on top-selling light vehicle platforms globally, continued strong commercial truck growth and a steady contribution from the global aftermarket.
Total revenue is also expected to improve 5% year over year on a constant currency basis in 2017. The company also expects annual margins to improve year over year in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been six revisions higher for the current quarter compared to three lower.
Tenneco Inc. Price and Consensus
Tenneco Inc. Price and Consensus | Tenneco Inc. Quote
VGM Scores
At this time, Tenneco's stock has an average Growth Score of 'C'. However, its Momentum is doing a lot better with an 'A'. Following the exact same course, 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.
Based on our scores, the stock is equally suitable for value and momentum investors while growth investors may want to look elsewhere.
Outlook
While estimates have been broadly trending upward for the stock, the magnitude of these revisions is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.