Standard Motor Products Inc. (SMP) has been gaining on strong demand for its aftermarket car parts as consumers look to upgrade existing cars as opposed to buying new.
Company Description
Standard Motor Products, Inc. manufactures and sells replacement parts for motor vehicles in the automotive aftermarket in the United States, Latin America and Europe. The company was founded in 1919 and has a market cap of $232 million.
Fixing up existing cars instead of buying new has been hot for the last year as consumer spending has buckled under unemployment and general economic weakness. This dynamic helped Standard Motor produce better than expected second-quarter results, reported on August 5.
Second-Quarter Results
Sales were down 8% from last year to $197.5 million, but earnings were better than expected at 27 cents per share, beating the Zacks Consensus Estimate of 14 cents.
The company noted that it was able to counter slightly lower sales with an expansion of gross margin, climbing to 25.5% from 21.7%. Standard also noted that it had saved $13 million in sales and administration costs from last year.
Estimates Up
Earnings estimates spiked after word of the solid quarter hit the street, with the current year adding 16 cents and climbing to 39 cents per share. The next-year estimate stands at 47 cents, a 22% growth projection.
Valuation Conversation
After the big run up, this stock is trading at a pretty steep premium to the overall market with a P/E of 31X.
The Chart
Shares of SMP have been on a big time rally since early March, bottoming out around $1.50 before hitting a recent high at $12.72. Some short-term resistance has developed in this area, take a look below.
