Bull of the Day: Visteon (VC) - Bull of the Day
28 March 2013 - 5:00PM
Zacks
Visteon Corp. (VC) delivered a big Q4 earnings and sales
beat on February 28, and management provided bullish guidance for
2013.
This prompted analysts to revise their estimates
significantly higher for both this year and next, sending the stock
to a Zacks Rank #1 (Strong Buy). Despite the strong earnings
momentum, the valuation picture still looks very reasonable with
shares trading at just 1.4x book value.
Visteon is a global automotive supplier that
specializes in climate, electronics and interiors systems, modules
and components for the major automotive manufacturers around the
globe. Over 80% of its sales come from outside of North
America.
Strong Q4 Beat
Visteon delivered a big fourth quarter beat on
February 28. Adjusted earnings per share came in at $1.17, beating
the Zacks Consensus Estimate by 20 cents.
Sales rose 5% to $1.823 billion, well ahead of the
consensus of $1.782 billion. This increase was primarily driven by
higher sales in the 'Climate' segment, which saw higher production
volumes in Asia and North America.
The gross profit margin expanded 253 basis points
to 10.9%. Meanwhile, selling, general and administrative expenses
held steady at 5.6% of total sales. These factors led to a solid
27% increase in earnings before interest, taxes, depreciation and
amortization (EBITDA).
Estimates Rising
Following strong Q4 results, management provided
encouraging sales and EBITDA guidance for 2013. This prompted
analysts to revise their estimates higher for both 2013 and 2014,
sending the stock to a Zacks Rank #1 (Strong Buy).
The 2013 Zacks Consensus Estimate is now $3.98,
representing 37% growth over 2012. The 2014 consensus is currently
38% higher at $5.50.
The two biggest factors of the Zacks Rank are the
'Agreement' and 'Magnitude' of the analysts' estimates. As you can
see in the chart below, both of these factors are moving in the
right direction:
![](http://staticzacks.net/images/zacks/blogs/1364332829_scaled_425.jpg)
Reasonable Valuation
The valuation picture looks reasonable for Visteon
with shares trading at 13x forward earnings, in-line with its
historical median.
Its price to book ratio is just 1.4, which is also
in-line with its historical multiple.
The Bottom Line
With strong earnings momentum and reasonable
valuation, Visteon offers investors attractive upside
potential.
Todd Bunton is the Growth & Income Stock
Strategist for Zacks Investment Research and Editor of the Income
Plus Investor service.
VISTEON CORP (VC): Free Stock Analysis Report
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