Bull of the Day: Visteon (VC) - Bull of the Day
July 26 2013 - 3:49AM
Zacks
Thanks to its outstanding
quarterly results, earnings estimates have been on the uptrend and
the company has maintained its Zacks rank #1 (Strong Buy) since
March this year.
About
the Company
Visteon
Corporation (VC) is a leading global automotive supplier
of climate, electronics and interiors products for vehicle
manufacturers. It serves original equipment vehicle manufacturers
with its technical, manufacturing, sales and service facilities
located in 29 countries.
The
company has been transforming from a US centric company with only
one major customer to a predominantly Asia-based, multi-customer
global enterprise.
Excellent
First Quarter Results
The
company reported its first quarter results on May 9, 2013. Adjusted
earnings came in at $2.02 per share, significantly ahead of the
Zacks consensus estimate of $1.15 per share.
Results
benefitted from increased vehicle production and new business
in Asia and North America, partially offset by lower
production volumes in Europe.
Hyundai-Kia accounted
for approximately 33% of the sales, while Ford accounted
for another 28%. On a regional basis, Asia accounted
for 46% of total sales, while Europe and
Americas represented 30% and 24% respectively.
Visteon updated
its full-year guidance for adjusted earnings, to a range
of $4.04 to $5.52 per share. The company has repurchased
2.2 million shares ($125 million) year-to-date, representing 4% of
its outstanding shares.
Improved
Industry Outlook
Per
Zacks Auto Industry Outlook, while a strong pent-up demand due to
aging vehicles on the U.S. roads along with falling unemployment
rate have been the key factors in driving the auto sales in the
U.S., Asia promises high growth for the industry.
Asian
countries, especially China and India, are expected to account for
40% of growth in the auto industry over the next five to seven
years due to their rapidly growing economies. With its strong
presence in Asia, VC will definitely benefit from the surging
demand for automobiles in that region.
Estimates
Revisions
As a result of strong
results and updated guidance, analysts have increased their
earnings estimates for VC. Zacks consensus estimate for the current
quarter now stands at $1.05 per share up from $0.97 per share, 30
days ago. The estimate for the current year is also up to $4.80 per
share from $4.74 per share earlier. The company has delivered
positive earnings surprise in three out of last four quarters, with
an average surprise of 22%. Visteon will announce its second
quarter results on August 8, 2013.
The Bottom Line
VC is a Zacks Rank#1
(Strong Buy) stock. It also has a Zacks recommendation of
Outperform”. Further Zacks Industry Rank of 60 out of 265
also indicates chance of outperformance in the near- to mid-
term.
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