On Jan 15, 2015, we initiated coverage on Delphi Automotive PLC (DLPH). This Zacks Rank #3 (Hold) stock had reported positive earnings surprises in each of the last four quarters with a positive average beat of 7.5%.
Delphi Automotive saw a 19.6% rise in adjusted earnings to $1.16 per share in the third quarter of 2014 from 97 cents per share in the prior-year quarter. Earnings also beat the Zacks Consensus Estimate of $1.13 a share.
Revenues rose 3.2% year over year to $4.1 billion but missed the Zacks Consensus Estimate of $4.3 billion. The revenues benefited from better performance in Asia and North America.
Delphi Automotive is one of the largest vehicle parts manufacturers in the world. Its strong balance sheet allows capital deployment through dividends, share buybacks and acquisitions. However, high dependence on original equipment manufacturers and lower revenue guidance for full-year 2014 are some negatives.
For 2014, Delphi Automotive raised the adjusted earnings expectation to the range of $5.00 to $5.10 from the previous estimate of $4.95 to $5.10 per share. Revenues are expected in the band of $17.0–$17.3 billion, down from the previous estimate of $17.2–$17.6 billion. Adjusted operating income will range from $2–$2.05 billion (11.8% of sales) in 2014. The company estimates capital expenditure at around $800 million.
Key Picks from the Sector
Investors interested in the auto industry could consider better-ranked stocks like Advance Auto Parts Inc. (AAP), O'Reilly Automotive Inc. (ORLY) and Douglas Dynamics, Inc. (PLOW), all sporting a Zacks Rank #1 (Strong Buy).
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