Tenneco (TEN) Q4 Earnings Miss, Revenues Meet Estimates

Tenneco Inc. TEN reported fourth-quarter 2018 results, wherein adjusted earnings per share of $1.30 missed the Zacks Consensus Estimate of $1.43. Also, the company’s bottom line declined from the prior-year quarter figure of $1.75.

In the reported quarter, Tenneco’s adjusted net income was $105 million compared with $91 million in fourth-quarter 2017.

Quarterly revenues rose 79% year over year to $4.3 billion, almost in line with the Zacks Consensus Estimate. This year-over-year rise was driven by the completion of the acquisition of Federal-Mogul LLC on Oct 1, 2018. On a constant-currency basis and excluding the impact of the acquisition, total revenues were up 4% while value-added revenues increased appreciably to $3.6 billion.

Adjusted EBIT (earnings before interest, taxes and non-controlling interests) was $399 million compared with $225 million recorded in the prior-year quarter. Adjusted EBIT results were driven by the completion of the Federal-Mogul acquisition.

2018 Results

Tenneco reported adjusted earnings per share of $6.28 in 2018, down from the 2017 figure of $6.71.

The company reported revenues of $11.8 billion in the year, up from the 2017 figure of $9.3 billion.

Tenneco Inc. Price, Consensus and EPS Surprise

 

Tenneco Inc. Price, Consensus and EPS Surprise | Tenneco Inc. Quote

Segmental Results

The Clean Air division’s fourth-quarter revenues were $1.7 billion compared with the year-earlier figure of $1.6 billion.

Revenues in the Ride Performance division were $469 million compared with $480 million recorded in the year-ago quarter.

The Aftermarket division’s revenues were $268 million, down from $282 million generated in fourth-quarter 2017.

Financial Position

Tenneco had cash and cash equivalents of $697 million as of Dec 31, 2018, up from $315 million as of Dec 31, 2017. Long-term debt was $5.3 billion as of Dec 31, 2018, compared with $1.36 billion as of Dec 31, 2017.

2019 Outlook

For 2019, the company expects revenues of $18.2-$18.4 billion. On a pro forma basis, it expects revenue growth rate to be 4-5% in constant dollars.

Zacks Rank and Stocks to Consider

Tenneco currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Ferrari N.V. RACE, Oshkosh Corp. OSK and General Motors Company GM. While Ferrari currently sports a Zacks Rank #1 (Strong Buy), Oshkosh and General Motors carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 18.5%. Over the past year, shares of the company have risen 7.6%.

Oshkosh has an expected long-term growth rate of 11.3%. Over the past six months, shares of the company have gained 2.7%.

General Motors has an expected long-term growth rate of 8.5%. Over the past three months, shares of the company have risen 9.7%.

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