Standard Motor Products – Momentum
By Zacks Investment Research
posted 21:41 06/06/11
| Stocks Analysis
 
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Standard Motor Products (SMP) isn't a flashy social-networking company, but what it does have is earnings and a very compelling valuation. That and rising estimates makes this Zacks #1 stock a strong momentum player.

Company Description

Standard Motor Products, Inc. manufactures and sells replacement parts for motor vehicles in the auto aftermarket industry in the US, Canada and Latin America. The company was founded in 1919 and has a market cap of $338 million.

Standard has been chugging higher for the last 6 months, recently hitting a new multi-year high on strong Q1 results from early May that came in well ahead of expectations.

First-Quarter Results

Revenue for the period was up 23% from last year to $220 million. Earnings also came in strong at 31 cents, 72% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 111% over the last four quarters.

Although the company said the good quarter was driven by strength in all its distribution channels, CEO Lawrence Sills noted that some of that demand was cyclical and came on the back of an inventory refresh. None the less, the company also noted that general market conditions continue to support demand.

Financial Profile

Turning to the financials, SMP's balance sheet is also on the upswing, with total debt down more than $20 million from last year to $73 million against $14 million in cash and short-term investments.

Estimates

We saw some pretty bullish movement in estimates off the good quarter, with the current year adding 18 cents to $1.32 while the next-year estimate added 15 cents to $1.46, a bullish 11% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks solid, with SMP's forward P/E of 11X a discount to its peer average of 13X.

12-Month Chart

On the chart, shares have been grinding higher for most of the last 9 months, recently hitting a new multi-year high on the good quarter and rising estimates. Take a look below.

   

 
 
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