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Here's Why You Should Hold Aptiv (APTV) Stock in Your Portfolio

Aptiv PLC APTV remains well poised to gain from technology investments and acquisitions that help it capitalize on developing opportunities in the automotive market.

The company has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

The company has an expected long-term (three to five years) earnings per share growth rate of 13.7%. Its earnings for 2024 and 2025 are expected to grow 16.7% and 25.5% year over year, respectively.

Revenues for 2024 and 2025 are expected to grow 7.5% and 8.1% year over year, respectively.

Aptiv PLC Revenue (TTM)

Aptiv PLC revenue-ttm | Aptiv PLC Quote

Factors That Augur Well

The strengthening global demand environment should benefit Aptiv's performance. Per a recent report from Statista, worldwide motor vehicle production has increased 10% year over year in 2023.

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Aptiv is exposed to the lucrative connected cars market. With security becoming a key selling point for connected cars, automakers are increasingly seeking related technologies. This is one of the reasons behind the quick advancement of the driver-assistance system market. Demand for personalization, infotainment connectivity and convenience are increasing rapidly.

Added features require more wiring inside vehicles. We believe that with excellent system integration expertise, Aptiv is well-positioned to leverage the growing electrification, connectivity and autonomy trends in the automotive sector.

The company’s "smart architecture" provides a competitive advantage and should help it continue gaining market share. Decreasing environmental impact and increasing fuel economy are the key industry trends, and OEMs have increased their search for better engine management and lower power consumption. Aptiv intends to take advantage of this trend as its “smart architecture” reduces wiring requirements in cars, helping them become fuel-efficient and add features.

The 2023 acquisition of Höhle has strengthened the company's Signal and Power Solutions segment. The 2022 acquisition of Wind River expanded Aptiv’s position in the automotive software solutions market.

Some Risks

Aptiv is witnessing an escalation in costs as it continues to invest in organic as well as inorganic growth. Operating expenses increased 14% year over year in 2023.

The company’s current ratio (a measure of liquidity) was at 1.72 at the end of the fourth quarter of 2023, lower than the 1.81 recorded at the end of the preceding quarter. A decline in the current ratio does not bode well.

Zacks Rank and Stocks to Consider

Aptiv currently has a Zacks Rank 3 (Hold).

A couple of better-ranked stocks from the broader Zacks Business Services sector are APi Group APG and Charles River Associates CRAI.

APi Group flaunts a Zacks Rank of 1 (Strong Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.

APG has a long-term earnings growth expectation of 17.9%. It delivered a trailing four-quarter earnings surprise of 5.1%, on average.

Charles River Associates carries a Zacks Rank of 2 (Buy) at present. It has a long-term earnings growth expectation of 16%.

CRAI delivered a trailing four-quarter earnings surprise of 8.1%, on average.

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Charles River Associates (CRAI) : Free Stock Analysis Report

Aptiv PLC (APTV) : Free Stock Analysis Report

APi Group Corporation (APG) : Free Stock Analysis Report

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