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Program Launches to Boost Tenneco’s (TEN) Organic Growth

Zacks

On Feb 14, we issued an updated research report on Tenneco Inc. TEN.

The leading designer, manufacturer and supplier of emission and ride control systems announced fourth-quarter and fiscal 2017 earnings on Feb 9. In the quarter, adjusted earnings per share came in at $1.89, surpassing the Zacks Consensus Estimate of $1.64. Further, quarterly revenues came in at $2.39 billion, beating the Zacks Consensus Estimate of $2.29 billion.

In fiscal 2017, a rise in volume sales in both the segments namely, Ride Performance and Clean Air helped Tenneco to witness a strong organic growth. Also, its focus to convert top-line growth into higher earnings enabled the company to boost earnings, along with the rise in cash inflow from operations.

Tenneco Inc. Price and Consensus


In first-quarter 2018, Tenneco expects to perform better than the industry on the back of new programs and dominant presence in the light vehicle market. Further, the company expects to witness a double-digit rise in commercial truck and off-highway revenues across all regions and a steady contribution from the global aftermarket. During the first quarter, total revenues are projected to improve about 3% year over year on a constant currency basis, while the fiscal-end figure might gain up to about 5% year over year.

Further, for 2019 and 2020, the company predicts revenues to grow 6-8% and 5-7%, respectively.

Tenneco’s stock has seen the Zacks Consensus Estimate for annual earnings being revised 0.8% upward over the last seven days.

Also, in order to enhance shareholder value and retain their confidence in the company, it regularly engages in the capital deployment strategies. In all the quarters of fiscal 2017, Tenneco paid quarterly cash dividends and bought back shares through its share repurchase programs. During the fiscal, Tenneco returned $222 million to shareholders, which includes repurchasing roughly 2.9 million shares for an amount of $169 million and a dividend payment of $53 million.

Moreover, the company’s diversified product portfolio will help it to grow across all geographical regions and platforms. It is also making incremental investments in the working capital to support growth.

Zacks Rank & Other Stocks to Consider

Tenneco has a Zacks Rank #2 (Buy).

Other top-ranked stocks in the auto space are PACCAR Inc. PCAR, Cummins Inc. CMI and Lear Corporation LEA, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PACCAR has an expected long-term growth rate of 10%. Its stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 12.2% upward over the last 30 days.

Cummins has an expected long-term growth rate of 11.4%. Its stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 0.7% upward over the last seven days.

Lear Corp. has an expected long-term growth rate of 7.1%. Its stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 0.8% upward over the last seven days.

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