Yahoo Finance Standard Motor to Gain From Cost Savings, Margin Woes Remain
On Dec 26, we issued an updated research report on Standard Motor Products, Inc. SMP.
In order to curb its production costs, the company is shutting down a few less-important facilities and relocating the same to merge with the existing ones, which in turn might help in the long term. By 2017, the company expects to save $6-$7 million as a result of these site shifts.
Apart from relocations, the company is taking various initiatives to regulate its expenses by combining businesses and reducing incentive compensation costs.
Standard Motor Products, Inc. Price and Consensus
Standard Motor Products, Inc. Price and Consensus | Standard Motor Products, Inc. Quote
However, these facility shifts are increasing its temporary costs, hampering the company’s financials in the process.
In the third-quarter of fiscal 2017, Standard Motor’s adjusted earnings per share and revenues missed the Zacks Consensus Estimate.
Last quarter, the company witnessed a year-over-year decline in revenues and a slump of 29.4% in gross margin, primarily due to provisional costs of plant-location shifts and other additional costs plus expenses.
Also, during the period, the company’s Temperature Control segment witnessed a 16.2% year-over-year fall, majorly due to less significant demand of its products, thanks to a cooler summer in 2017. This same trend is anticipated to follow in the fourth quarter of 2017 as well.
Price Performance
Shares of Standard Motor have declined 15.4% year to date, substantially underperforming the 1.9% gain of the industry it belongs to.
Zacks Rank & Key Picks
Standard Motor carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Denso Corporation DNZOY, Tower International, Inc. TOWR and Honda Motor Company HMC, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Denso has an expected long-term growth rate of 10.1%. In the last three months, shares of the company have rallied 18.7%.
Tower International has an expected long-term growth rate of 10%. Shares of the company have gained 15.1% over the last three months.
Honda has an expected long-term growth rate of 3.8%. Year to date, shares of the company have risen 17.9%.
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