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Why Should You Hold Aptiv (APTV) Stock in Your Portfolio?

Zacks Equity Research

Aptiv PLC APTV is poised for growth on rising demand for vehicle safety features and steady adoption of electric vehicles.

The leading auto components supplier has a long-term expected earnings growth rate of 11.3% and an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.

Factors Aiding the Stock

Shares of Aptiv have gained a massive 45.4% year to date, outperforming the 16.7% rally of the industry it belongs to. We expect this momentum to continue going forward as the company is well poised to benefit from the rapidly growing global automotive safety system market.

According to Stratistics MRC, this market will grow from $82.8 billion in 2017 to $195.33 billion in 2026 at a CAGR of 10%. Aptiv being a leading provider of vehicle safety solutions is well positioned to benefit from this trend.

With the rising need to meet stringent emission standards, automakers have increased their focus on electric vehicles. This should drive the company’s signal & power business that offers vehicles complete electrical architecture.

Some Overhangs

Currently, the global demand environment is pretty challenging. For this year, Aptiv expects global vehicle production to be down 4% with 13% decline in China and 4% in Europe.

Investments in products like autonomous driving software are expected to make meaningful contribution to the company’s growth after 2020, indicating that acceptance and integration of technology will take longer time.

Zacks Rank and Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Business Services sector are Visa V, Huron Consulting HURN and Nielsen NLSN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected earnings (three to five years) growth rate for Visa, Huron and Nielsen is 16.6%, 13.5% and 12%, respectively.

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