Tenneco (TEN) Provides Preliminary Revenue Results For Q4

Tenneco Inc. (NYSE:TEN) announced fourth-quarter and 2018 revenues, and provided guidance for 2019. During fourth-quarter 2018, the company’s total revenues rose 79% year over year to $4.3 billion, majorly backed by the acquisition of Federal-Mogul on Oct 1, 2018. Apart from the acquisition, revenues increased 4% on a constant-currency basis. The company’s revenue growth can be attributed to volume growth for commercial truck and off-highway, and surge in light-vehicle customers.

In the year, Tenneco witnessed 24% year-over-year rise in commercial truck and off-highway while light vehicles surged 5%. Including Federal-Mogul, total revenues were $11.8 billion. Exclusive of the acquisition and foreign currency fluctuation, the company’s organic revenue growth was 6% in 2018, which was in line with estimates.

Further, adjusted earnings are expected to be at the lower end of the projected range announced during third-quarter 2018 earnings release.

Tenneco’s diverse businesses sustained organic growth during the fourth quarter of 2018, similar to prior quarters. Varied product range offered to numerous end-markets and geographical regions aided the company in 2018. Additionally, the acquisition of Federal-Mogul at the beginning of the fourth quarter and Ohlins Racing in January 2019 will support Tenneco to create two separate entities and benefit from synergies.

For the current year, Tenneco projects growth drivers to continue supporting revenues, which will likely beat global industry production. On a pro forma basis, it anticipates constant dollar revenues to grow 4-5% in 2019, exceeding the light-vehicle industry production by 6 to 7 percentage points. Per IHS Markit, global light-vehicle production is anticipated to witness a decline of 2% in 2019.

The company was set to release fourth-quarter and 2018 earnings on Feb 25. But the announcement date has been deferred lately to complete the first-year closure of the combined company.

Over the past month, shares of Tenneco have underperformed the industry it belongs to. During the period, shares of the company gained 2.6% compared with the industry’s growth of 6.3%.

Zacks Rank & Stocks to Consider

Tenneco currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are General Motors Company (NYSE:GM) , Valeo (PA:VLOF) S.A. (OTC:VLEEY) and Ferrari N.V. (NYSE:RACE) . General Motors and Valeo currently carry a Zacks Rank #2 (Buy) while Ferrari sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

General Motors has an expected long-term growth rate of 8.5%. Shares of the company have gained 4% in the past month.

Valeo has an expected long-term growth rate of 0.5%. Share price of the company has increased 5.6% in the past month.

Ferrari has an expected long-term growth rate of 18.5%. Over the past month, shares of the company have gained 16.4%.

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