On Apr 10, 2015, shares of Delphi Automotive PLC DLPH reached a new 52-week high of $85.21, before eventually closing at $84.71. The closing price represents a year-to-date return of 16.5%, much higher than the S&P 500’s total return of 2.1%. Average volume of shares traded over the last three months is roughly 2.09 million.
Share Price Drivers
Delphi Automotive’s shares are gaining since the company’s announcement that it has recently used an automated vehicle to travel from San Francisco to New York. Apart from being the first coast-to-coast trip in an automated vehicle, this was the longest automated drive in North America. Delphi Automotive used the drive to collect information that will help optimize its current active safety product portfolio and speed up the development of new advance active safety technologies. It is one of the few companies that offer complete automated driving solutions.
This Zacks Rank #3 (Hold) stock regularly undertakes acquisitions and alliances to enhance its technological capability, increase its operating scale, augment its client base and expand geographically. Moreover, Delphi Automotive’s strong balance sheet and free cash flows allow it to follow an active capital deployment strategy. Consequently, in Jan 2015, the company’s board authorized a new share repurchase program for $1.5 billion.
Delphi Automotive’s cash balance will be further fortified by the sale of its thermal business and stake in Shanghai Delphi Automotive Air-Conditioning System Co., Ltd to MAHLE GmbH that was announced in Feb 2015. The company is expected to receive $727 million for the thermal business, which will be used to finance its growth initiatives such as acquisitions and share repurchases, with an aim to boost shareholder value. The transaction will also strengthen Delphi Automotive’s high-growth product portfolio.
For 2015, Delphi Automotive expects adjusted earnings in the range of $5.35–$5.65 per share, significantly higher than $5.09 recorded in 2014. Revenues are expected in the band of $17.1–$17.5 billion, rising from $17.02 billion in 2014. Adjusted operating income will likely be in the range of $2.1–$2.2 billion (12.3%–12.6% of sales) in 2015, increasing from $2.02 billion (11.9% of sales) in 2014.
Other Stocks to Consider
Better-ranked automobile stocks include Gentherm Incorporated THRM, General Motors Company GM and Wabash National Corp. WNC. While Gentherm and Wabash National sport a Zacks Rank #1 (Strong Buy), General Motors carries a Zacks Rank #2 (Buy).
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