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Delphi Automotive (DLPH) Q2 Earnings & Revenues Top Estimates

Delphi Automotive plc DLPH posted $1.71 per share of adjusted earnings in the second quarter of 2017, up from $1.59 earned in the prior-year quarter. Earnings per share surpassed the Zacks Consensus Estimate of $1.65.

Adjusted net income increased to $457 million from $435 million a year ago. This figure includes advantageous impact of reduced share count and lower tax rate.

Revenues were $4.32 billion and surpassed the Zacks Consensus Estimate of $4.2 billion.

Revenues increased 2.66% year over year, excluding the impact of currency exchange, commodity movements, acquisitions and divestitures. The upside was led by a performance improvement of 15% in South America, 3% in Europe, 15% in Asia and a stable performance in North America.

Adjusted operating income rose to $587 million from $580 million in the third quarter of 2016. Adjusted operating margin decreased to 13.6% from 13.8% in the year-ago quarter. This slight decline in margins can be attributed to the divestiture of Mechatronics and continued investments for growth. These were partly offset by sales growth and cost reduction initiatives.

Delphi Automotive PLC Price, Consensus and EPS Surprise

Segment Details

In the Electrical/Electronic Architecture segment, revenues declined to $2.35 billion in the reported quarter. Also, adjusted operating income slid 3% to $333 million.

In the Powertrain Systems segment, revenues rose 4% to $1.2 billion. Adjusted operating income surged 21% to $162 million.

The Electronics and Safety segment’s revenues increased 10% to $821 million. However, adjusted operating income declined 9% to $92 million.

Share Repurchases

In second-quarter 2017, Delphi Automotive repurchased 1.09 million shares for approximately $95 million. Following this, the company had approximately $1.1 billion available for future repurchases under its current share buyback program.

Financial Position

Delphi Automotive had cash and cash equivalents of $792 million as of Jun 30, 2017 compared with $838 million as of Dec 31, 2016. Total debt increased to $4.1 billion as of Jun 30, 2017 compared with $3.96 billion as of Dec 31, 2016.

In second-quarter 2017, operating cash flow increased to $599 million from $575 million in 2016. Capital expenditure totaled $178 million compared with $172 million a year ago.

Outlook

For third-quarter 2017, Delphi Automotive decreased its revenue guidance to $4-$4.1 billion, compared with the previous expectation of $4.15–$4.25 billion. Adjusted earnings per share are expected to be in the $1.52-$1.58 range, comapred with the previous guidance of $1.62–$1.68.

Adjusted operating income is anticipated in the range of $520-$540 million (13.1% of sales) comapred with the previous guidance of $560–$580 million (13.5–13.7% of sales) in third-quarter 2017.

For 2017, Delphi Automotive increased its revenue expectation to $16.85-$17.05 billion, compared with the previous expectation of $16.5–$16.9 billion. Adjusted earnings per share are expected in the range of $6.55-$6.75 compared with the previous guidance of $6.40–$6.70.

Price Performance

Delphi Automotive shares have surged 21.8% in the last six months, substantially outperforming the 10.6% increase of the industry it belongs to.



Zacks Rank & Other Key Picks

Delphi Automotive currently carries a Zacks Rank #3 (Hold).

Some other stocks worth considering from the automobile space are, Fox Factory Holding Corp. FOXF, Wabco Holdings Inc. WBC and Westport Fuel Systems Inc. WPRT, all currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has long-term growth rate of 15.9%.

Wabco has expected long-term earnings-per-share growth rate of 17.5%.

Westport Fuel has expected earnings growth rate of 30% over the long term.

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