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Category: Stock Market and Motorcar Parts of America
Date: 10 February 2020 Stock Price: $19.12 We take a look at the 3rd quarter earnings report of their 2020 fiscal year of Motorcar Parts of America, a remanufacturer, manufacturer and distributor of automotive aftermarket parts.
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About Motorcar Parts of America
Motorcar Parts of America, Inc. is a remanufacturer, manufacturer and distributor of automotive aftermarket parts -- including alternators, starters, wheel bearing and hub assemblies, brake calipers, brake master cylinders, brake power boosters, rotors, brake pads and turbochargers utilized in imported and domestic passenger vehicles, light trucks and heavy-duty applications. In addition, the company designs and manufactures test solutions for performance, endurance and production testing of electric motors, inverters, alternators, starters, and belt starter generators for the OE, aerospace and aftermarket. Motorcar Parts of America’s products are sold to automotive retail outlets and the professional repair market throughout the United States and Canada, with facilities located in New York, California, Mexico, Malaysia, China and India, and administrative offices located in California, Tennessee, Mexico, Singapore, Malaysia and Canada
Overview of Motorcar Parts of America's 3rd quarter 2020 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Net Sales: $125.574 million (up from $124.113 million for the same quarter of the previous year)
- Net Sales increased by 1.17% over the last 12 months
- Cost of goods sold: $97.913 million (down from $102.952 million for the same quarter of the previous year)
- Cost of goods sold decreased by -4.89% over the last 12 months
- Some margin gains for Motorcar Parts of America with their net sales increasing slightly while their cost of goods sold showed significant declines over the same period.
- Net income: $865 thousand (up from -$3.102 million for the same quarter of the previous year)
- Diluted earnings per share: $0.04 (up from -$0.16 for the same quarter of the previous year)
- PE ratio of Motorcar Parts of America: 121.8 ( extremely high as the group's latest quarter made a slight profit compared to a significant loss a year ago)
- Number of shares in issue: 19.305 million (up from 18.801 million for the same period of the previous year)
- Cash and cash equivalents: $9.458 million
- Cash and cash equivalents per share: $0.49
- Cash and cash equivalents makes up 2.56% of Motorcar Parts of America's market capital
- Cash and cash equivalents makes up 1.3% of Motorcar Parts of America's total assets
- Accounts receivable: $52.930 million
- Accounts receivable makes up 7.2% of Motorcar Parts of America's total assets
- Stockholders equity in Motorcar Parts of America: $284.362 million
- Stockholders equity per share: $14.72
- So Motorcar Parts of America is trading at 1.29 times its stockholders equity per share, which is outside the expected range of between 2 and 4 times that most firms tend to trade at.
Motorcar Parts of America (NASDAQ: MPAA) management commentary on 3rd quarter 2020 earnings
LOS ANGELES--(BUSINESS WIRE)--Feb. 10, 2020-- Motorcar Parts of America, Inc. (Nasdaq: MPAA) today reported results for its fiscal 2020 third quarter ended December 31, 2019 -- reflecting profitability, generation of cash flow from operations of $22 million during the fiscal third quarter and margin improvement.
“Notwithstanding industry sales softness and the deferral of certain product orders late in the quarter, we achieved record sales and generated record cash flow from operations and improved margins. Our strategic investments are creating a transformative platform for growth, as we expand our position within the $125 billion aftermarket hard parts industry,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
“Notwithstanding industry sales softness and the deferral of certain product orders late in the quarter, we achieved record sales and generated record cash flow from operations and improved margins. Our strategic investments are creating a transformative platform for growth, as we expand our position within the $125 billion aftermarket hard parts industry,” said Selwyn Joffe, chairman, president and chief executive officer of Motorcar Parts of America.
“Our footprint of the future is rapidly evolving and we expect to realize incremental benefits from our investments as we reach our target completion by the end of the second quarter of our new fiscal year,” Joffe added.
UPDATED FISCAL 2020 SALES GUIDANCE
Due to the factors impacting the fiscal third quarter noted above, Motorcar Parts of America now believes net sales for its fiscal year 2020 ending March 31 should be approximately $534 million and adjusted net sales for its fiscal year 2020 ending March 31 should be approximately $539 million, representing 13 percent growth year-over-year on both a GAAP and non-GAAP basis, with sales momentum improving in the current fiscal fourth quarter.
UPDATED FISCAL 2020 SALES GUIDANCE
Due to the factors impacting the fiscal third quarter noted above, Motorcar Parts of America now believes net sales for its fiscal year 2020 ending March 31 should be approximately $534 million and adjusted net sales for its fiscal year 2020 ending March 31 should be approximately $539 million, representing 13 percent growth year-over-year on both a GAAP and non-GAAP basis, with sales momentum improving in the current fiscal fourth quarter.
Motorcar Parts of America (NASDAQ: MPAA) stock price history
The image below obtained from Google, shows the stock price history of Motorcar Parts of America over the last 5 years. And its not been a very good time for Motorcar Parts of America stockholders. 5 years ago the stock of Motorcar Parts of America was trading at around $24.80 a stock and its currently trading at $19.12 a stock. That's a loss of -60.6% provided to Motorcar Parts of America stockholders over the last 5 years.
The stock of Motorcar Parts of America is trading at a little closer to its 52 week high of $24.60 than it is to its 52 week low of $13.41 a stock, which to us is an indication that the short term sentiment and momentum of Motorcar Parts of America stock is neutral to slightly positive.
The stock of Motorcar Parts of America is trading at a little closer to its 52 week high of $24.60 than it is to its 52 week low of $13.41 a stock, which to us is an indication that the short term sentiment and momentum of Motorcar Parts of America stock is neutral to slightly positive.
Recent coverage of Motorcar Parts of America
The extract below discusses the latest regarding Motorcar Parts of America as obtained from TheStreet.com
Wall Street expects a year-over-year increase in earnings on higher revenues when Motorcar Parts (MPAA - Free Report) reports results for the quarter ended December 2019. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus Estimate
This maker of remanufactured vehicle alternators and starters is expected to post quarterly earnings of $0.43 per share in its upcoming report, which represents a year-over-year change of +22.9%. Revenues are expected to be $139.30 million, up 16.4% from the year-ago quarter.
Read the full article here
Wall Street expects a year-over-year increase in earnings on higher revenues when Motorcar Parts (MPAA - Free Report) reports results for the quarter ended December 2019. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The stock might move higher if these key numbers top expectations in the upcoming earnings report. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus Estimate
This maker of remanufactured vehicle alternators and starters is expected to post quarterly earnings of $0.43 per share in its upcoming report, which represents a year-over-year change of +22.9%. Revenues are expected to be $139.30 million, up 16.4% from the year-ago quarter.
Read the full article here
Motorcar Parts of America (NASDAQ: MPAA) stock valuation
So what do we value Motorcar Parts of America stock at after the release of their 3rd quarter 2020 earnings and the fiscal guidance provided for the full fiscal 2020? Based on Motorcar Parts of America earnings report and fiscal guidance provided our valuation models provides a target (full value) price of Motorcar Parts of America at $57.90 a stock. We therefore believe that the stock of Motorcar Parts of America is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $57.90 therefore we believe a good entry point into Motorcar Parts of America stock is at $52.10 or below. We expect the stock of Motorcar Parts of America to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Motorcar Parts of America as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $57.90 therefore we believe a good entry point into Motorcar Parts of America stock is at $52.10 or below. We expect the stock of Motorcar Parts of America to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Motorcar Parts of America as a sell
Next earnings release of Motorcar Parts of America
It is expected that Motorcar Parts of America will publish their 4th quarter 2020 earnings report in early May 2020