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Sensata (ST) Q3 Earnings Beat Estimates, Revenues Decline Y/Y

Sensata Technologies Holding plc ST reported third-quarter 2023 adjusted earnings per share (EPS) of 91 cents compared with 85 cents reported a year ago. The bottom line surpassed the Zacks Consensus Estimate of 90 cents.

Quarterly revenues aggregated $1,001.3 million, down 1.7% year over year. The top line missed the consensus estimate by 0.2%. Unfavorable currency changes reduced revenues by 1%.

Segmental Results

Performance Sensing revenues (75.3% of total revenues) increased 2% year over year to $754 million. The Automotive sector benefited from content growth and price realization partly offset by unfavorable revenue mix and foreign currency movement. Segmental operating income was $186 million compared with $181.9 million in the prior-year quarter.

Sensing Solutions revenues (24.7%) were $247.3 million, down 11.3% from the previous year. The year-over-year downtick was caused by a weakness in industrial revenue growth, which offset increases in Aerospace revenues. Industrial revenue growth was affected by softness in HVAC, appliance, IT & telecom markets, and unfavorable forex volatility.

Sensata Technologies Holding N.V. Price, Consensus and EPS Surprise

Sensata Technologies Holding N.V. Price, Consensus and EPS Surprise
Sensata Technologies Holding N.V. Price, Consensus and EPS Surprise

Sensata Technologies Holding N.V. price-consensus-eps-surprise-chart | Sensata Technologies Holding N.V. Quote


The segment’s operating income decreased to $71.3 million from $80.3 million, mainly due to decline in industrial revenue growth.

 

Other Details

In the quarter under review, overall organic revenues were down 0.7%. The heavy vehicle off-road business witnessed a 3.8% decline in organic revenue growth. The automotive business reported organic revenue growth of 5.9%. The industrial business plunged 17.1% organically. The aerospace business witnessed a 28.7% jump in organic revenues.

Total operating expenses were $885.04 million, up 15.6% compared with the prior-year quarter, primarily due to higher restructuring charges. Adjusted operating income was $191.6 million, down 2.9% compared with the earlier year. The downward movement was mainly caused by lower revenues and unfavorable movements in foreign currency partly offset by higher productivity and favorable pricing.

Adjusted EBITDA totaled $228.3 million in the quarter, up from $224.2 million in the previous year.

Cash Flow & Liquidity

In the quarter under discussion, Sensata generated $138.9 million of net cash from operating activities compared with $93.8 million in the prior-year quarter. Free cash flow was $87.2 million compared with $57.5 million a year ago.

As of Sep 30, 2023, the company had $889.7 million in cash and cash equivalents and $3,771.8 million of net long-term debt compared with $857.3 million and $3,770.5 million, respectively, as of Jun 30, 2023.

In the reported quarter, Sensata returned $18.3 million to shareholders via quarterly dividends and repurchased shares worth $35.2 million.

Guidance

Sensata provided guidance for the fourth quarter of 2023. The company expects revenues in the range of $950-$1,000 million, suggesting a decline of 6-1% year over year. Adjusted operating income is projected to be between $176 million and 194 million, indicating a year-over-year dip of 14%-5%.

Adjusted EPS is estimated to be 79-89 cents, hinting at a tumble of 18%-7%. Adjusted net income is anticipated in the $120-136 million band, implying a year-over-year fall of 18-7%.

Zacks Rank

Sensata currently has a Zacks Rank #3 (Hold)

Stocks to Consider

Some better-ranked stocks worth consideration in the broader technology space are Asure Software ASUR, Synopsys SNPS and VMware VMW. While Asure Software sports a Zacks Rank #1 (Strong Buy), Synopsys and VMware carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Asure Software’s 2023 earnings per share (EPS) has increased 5.9% in the past 60 days to 54 cents.

Asure Software’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 676.4%. Shares of ASUR have climbed 28.2% in the past year.

The Zacks Consensus Estimate for Synopsys’ fiscal 2023 EPS is unchanged in the past 60 days at $11.09. SNPS’ long-term earnings growth rate is 16.7%. Shares of SNPS have climbed 67% in the past year.

The Zacks Consensus Estimate for VMware’s fiscal 2024 EPS has improved 2.3% in the past 60 days to $7.23.

VMware’s earnings outpaced the Zacks Consensus Estimate in two of the last four quarters while missing twice. The average earnings surprise is 1.2%. Shares of VMW have jumped 30.1% in the past year

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