Updated Research Report on Tenneco - Analyst Blog

On Apr 11, 2014, we issued an updated research report on Tenneco Inc. TEN. This Zacks Rank #3 (Hold) stock reported adjusted earnings per share of 96 cents in the fourth quarter of 2013, which beat the Zacks Consensus Estimate by 12 cents. Earnings per share jumped 45.5% year over year from 66 cents in the fourth quarter of 2012.

Revenues increased 15.9% year on year to $2.03 billion, beating the Zacks Consensus Estimate of $1.94 billion. Revenues benefited from higher global light vehicle volumes, launch of new light vehicle platforms and a growing commercial truck and off-highway business.

Tenneco's emission control business will benefit from tighter emission regulations through 2015, when its global market share is expected to hit 10%. The company expects to achieve a 5-year average compound annual original equipment (OE) revenue growth rate of 18% to 20% through 2014, driven by emissions regulations that are being implemented globally.

However, pricing pressure from original equipment manufacturers (OEMs) remains a problem for Tenneco. Additionally, the company largely depends on a few customers in the OEM segment. The company's top 10 aftermarket customers accounted for nearly 55% of total aftermarket sales in 2013.

Tenneco reported positive earnings surprises in the trailing four quarters with an average beat of 7.55%. The Zacks Consensus Estimate for Tenneco's 2014 earnings is $4.38 per share, up 15.93% over 2013.

Key Picks from the Sector

Some better-ranked stocks in the sector include Gentherm Incorporated THRM, Valeo SA (VLEEY) and Allison Transmission Holdings, Inc. ALSN, all of which carry a Zacks Rank #1 (Strong Buy).