Meritor, Inc. MTOR has been performing well lately. The company has a market capitalization of roughly $1.9 billion. The stock has moved up 6.8% in the past month, outperforming 5.2% growth recorded by the industry. The company has a VGM Score of A. This stock, with strong fundamentals and solid long-term growth opportunities, can be considered a solid bet now.
Strong Q2 Performance & Upbeat Outlook
Meritor’s second-quarter fiscal 2018 results improved on a year-over-year basis. Adjusted income from continuing operations was $68 million compared with $32 million in second-quarter fiscal 2017. Adjusted earnings were 75 cents per share in the reported quarter, beating the Zacks Consensus Estimate of 65 cents. Also, the bottom line came in higher than the prior-year quarter’s figure of 35 cents.
Revenues rose around 32% year over year to $1.07 billion. The company’s top line also beat the Zacks Consensus Estimate of $921.7 million. This rise was primarily due to higher production across all markets, business wins and favorable foreign currency.
For fiscal 2018, Meritor expects revenues of $4-$4.1 billion compared with the previous expectation of $3.8-$3.9 billion. Adjusted earnings per share from continuing operations are anticipated to be $2.7-$2.85 per share compared with the past projection of $2.5-$2.7.
Estimates Moving Up
Estimates for the current quarter remained unchanged at 76 cents per share over the past month. For the current fiscal, estimates have moved north over the past 30 days, reflecting analysts’ confidence on the stock.
Over the past 30 days, the Zacks Consensus Estimate for fiscal 2018 earnings has moved up 2.6% to $2.78.
New M2019 Plan
Meritor will gain from its new M2019 plan. In line with the plan, the company aims for new business wins and continues to invest in new products and technologies. It regularly wins contracts to supply line-haul and heavy-haul axles, and brakes to its customers.
Product Introduction
Meritor regularly introduces products. It has plans to introduce 20 products over the next three years. The primary objective of the plan is to grow revenues by 20% above the market and increase earnings per share by $1.25.
Zacks Rank & Other Stocks to Consider
Meritor currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
A few other top-ranked stocks in the auto space are Oshkosh Corporation OSK, Allison Transmission Holdings, Inc. ALSN and Ferrari N.V. RACE. While both Oshkosh and Allison Transmission Holdings sport a Zacks Rank #1, Ferrari has a Zacks Rank #2 (Buy).
Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have risen 21.1% over the past year.
Allison Transmission Holdings has an expected long-term growth rate of 10%. Over the past year, shares of the company have gained 10.5%.
Ferrari has an expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 46.4%.
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