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Piper Jaffray Rated Delphi Automotive as ‘Overweight’

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Price movement of Delphi Automotive

Delphi Automotive (DLPH) has a market cap of $18.4 billion. It fell by 2.3% to close at $67.33 per share on June 10, 2016.

The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.39%, -4.2%, and -20.8%, respectively, on the same day. This means that DLPH is trading 0.64% below its 20-day moving average, 5.3% below its 50-day moving average, and 9.3% below its 200-day moving average.

Related ETF and peers

The First Trust Large Cap Value AlphaDex ETF (FTA) invests 0.18% of its holdings in Delphi Automotive. This ETF tracks an index that selects and weights value stocks from the S&P 500 Value Index using fundamental factors including sales, book value, and cash flows. The YTD price movement of FTA was 5.4% on June 10, 2016.

The market caps of Delphi Automotive’s competitors are as follows:

  • Autoliv (ALV) – $10.7 billion
  • Lear (LEA) – $8.5 billion
  • Visteon (VC) – $2.5 billion

Delphi Automotive’s ratings

Piper Jaffray has initiated the coverage of Delphi Automotive with an “overweight” rating and set the company’s price target at $82.00 per share.

On June 6, 2016, Goldman Sachs downgraded Delphi Automotive rating from “conviction buy” to “buy.”

Performance of Delphi Automotive in 1Q16

Delphi Automotive reported fiscal 1Q16 net sales of $4.1 billion, a rise of 6.7% compared to net sales of $3.8 billion in fiscal 1Q15. Sales from its Electrical-Electronic Architecture, Powertrain Systems, and Electronics and Safety segments rose by 9.6%, 1.2%, and 5.6%, respectively, in fiscal 1Q16 compared to fiscal 1Q15. It reported restructuring expenses of $35.0 million in fiscal 1Q16 compared to $16.0 million in fiscal 1Q15.

Its net income and EPS (earnings per share) rose to $425.0 million and $1.53, respectively, in fiscal 1Q16. This compares to $209.0 million and $0.72, respectively, in fiscal 1Q15.

Delphi’s cash and cash equivalents fell by 13.5%. Its inventories rose by 9.0% in fiscal 1Q16 compared to fiscal 4Q15. Its current ratio fell to ~1.3x and its debt-to-equity ratio rose to 3.6x in fiscal 1Q16. This compares to a current ratio and debt-to-equity ratio of 1.3x and 3.4x, respectively, in fiscal 4Q15.

Projections

Delphi Automotive (DLPH) has made the following projections for fiscal 2Q16:

  • revenue: $4.1 billion–$4.2 billion
  • adjusted operating income: $555 million–$585 million
  • adjusted EPS: $1.50–$1.60
  • adjusted effective tax rate: 17%

The company has made the following projections for fiscal 2016:

  • revenue: $16.6 billion–$17.0 billion
  • adjusted operating income: $2.2 billion–$2.3 billion
  • adjusted EPS: $5.80–$6.10
  • cash flow from operations: $2.0 billion
  • capital expenditures: $800 million
  • adjusted effective tax rate: 17%

In the next part of this series, we’ll take a look at Coach.

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