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Tenneco Provides Clean Air Products to Meet Customer Demand


Feb. 9 2016, Published 9:02 p.m. ET

Price movement of Tenneco

Tenneco (TEN) has a market cap of $2.1 billion. It fell by 3.0% to close at $35.59 per share as of February 8, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is -6.3%, -14.4%, and -22.5%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, Tenneco is trading 6.5% below its 20-day moving average, 19.8% below its 50-day moving average, and 30.0% below its 200-day moving average.

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The iShares Morningstar Small Value ETF (JKL) invests 0.58% of its holdings in Tenneco. The ETF tracks a market-cap-weighted index of US small-cap value stocks. The index stocks from the 90th to the 97th percentile of the market cap spectrum, using fundamental factors. The YTD price movement of JKL was -9.2% as of February 5, 2016.

The competitors of Tenneco (TEN) and their market caps are:

  • Cummins (CMI): $17.5 billion
  • BorgWarner (BWA): $6.5 billion
  • Lear Corporation (LEA): $7.2 billion

Tenneco provides new system

Tenneco (TEN) announced it would supply the emission control system on the all-new 2016 Lexus RX luxury crossover platform, which is currently in production. It is also supplying both hot- and cold-end components, including the front pipe assembly, Y-pipe, underbody converter, muffler, and tailpipe assemblies.

The company’s products help customers to meet stringent emissions control regulations with after-treatment technologies for gasoline and diesel engines. These technologies include manifolds, catalytic converters, selective catalytic reduction, advanced mixing technologies, particulate filters, and complete hot- and cold-end exhaust systems.

Guidance for fiscal 2016

Tenneco expects fiscal 2016 revenue growth of 5% at current industry growth forecasts and excluding the impact of currency. This revenue growth would be driven by following:

  • incremental Clean Air revenue from 2015 light vehicle launches and new launches in 2016
  • incremental revenue from Monroe Intelligent Suspension programs with four new launches in 2016 and the continued ramp-up on programs launched in 2015
  • commercial truck and off-highway emissions regulations with additional content on off-highway Tier 4f and Stage 4 programs in North America and Europe
  • incremental revenue from 2015 launches of a North America medium-duty commercial truck and an off-highway program in Japan
  • increasing market share with commercial truck customers in China
  • initial launches with commercial truck customers in India to comply with BS IV regulations

The revenue estimates include the following assumptions:

  • further weakening in off-highway industry volumes
  • continued weak commercial truck production in China and Brazil
  • China commercial truck after-treatment installation rates similar to 2015

For fiscal 2017 and fiscal 2018, Tenneco expects revenue growth to accelerate and outpace industry production by 3%–5% each year as new light vehicle emissions regulations will begin in North America and Europe.

Tenneco’s PE (price-to-earnings) and PBV (price-to-book value) ratios were 10.9x and 4.8x, respectively, as of February 8, 2016.


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