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Delphi Automotive Plans to Launch a New Plant in Morocco

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Price movement

Delphi Automotive (DLPH) has a market cap of $16.7 billion. Its stock fell by 5.4% to close at $60.19 per share on July 5, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 1.9%, -10.3%, and -29.2% respectively, on the same day. DLPH is trading 8.8% below its 20-day moving average, 12.1% below its 50-day moving average, and 18.2% below its 200-day moving average.

Related ETF and peers

The First Trust Large Cap Value AlphaDex Fund (FTA) invests 0.18% of its holdings in Delphi Automotive. The 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 2.0% on July 5.

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

  • Autoliv (ALV): $9.2 billion
  • Lear Corporation (LEA): $7.4 billion
  • Visteon Corporation (VC): $2.4 billion

Delphi Automotive’s new plans

Delphi Automotive is going to launch a new factory to make electrical distribution systems and a R&D (research and development) center in the North African kingdom.

Moulay Hafid Elalamy, Morocco’s minister of industry, said, “Delphi’s investment is huge, some seven projects including a plant and an R&D center, but I can’t disclose the investment amount.”

Reuters reported, “The Moroccan government aims to lift the overall industrial component of the gross domestic product (or GDP) to 20%, up from 16%, reaching around 500,000 jobs by the same period.”

Delphi Automotive’s performance in 1Q16

Delphi Automotive reported 1Q16 net sales of $4.1 billion, a rise of 6.7% compared to net sales of $3.8 billion in 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 1Q16 compared to fiscal 1Q15. The company reported restructuring expenses of $35.0 million in 1Q16 compared to $16.0 million in 1Q15.

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

Delphi’s cash and cash equivalents fell by 13.5%. Its inventories rose by 9.0% in 1Q16 compared to 4Q15. Its debt-to-equity ratio rose to 3.6x in fiscal 1Q16, as compared to 3.4x in fiscal 4Q15.

Projections

Delphi Automotive (DLPH) has made the following projections for 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 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 Brunswick Corporation.

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