Auto parts manufacturers such as Tenneco (NYSE: TEN) and Adient (NYSE: ADNT) began operations after limping in 2020. As the company faced challenges such as global chip shortages, sales and profit growth rebounded rapidly.
Tenneco rose 55.71% in May and 26.34% this month. These are part of the bigger picture. The return rate so far was 86.89% compared to 149.50% last year.
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What caused this abnormal price change?
After the company released a better-than-expected quarterly earnings report, the initiative began in early May.
Tenneco reported earnings per share of $ 1.09, revenue of $ 4.731 billion, and growth in both bottom line and top result.
Since mid-March, the stock has formed a cup-shaped consolidation, with a very narrow trading range and low trading volume. You will often see these features before the stock moves, and this is the case in this case.
The stock broke buy points above $ 13.12 on May 10 with more than three times the average volume. It also rose sharply in the first two trading days.
Weekly trading volume for the week ending May 14 was 86% higher than average.
The company’s drive for clean air technology drove most of the growth this quarter.
Due to the known semiconductor shortage, automakers are focusing their efforts on the latest best-selling SUVs and pickup trucks. These production lines are driving demand for Tenneco’s emission systems. The increase in sales of used cars, some of which need to be improved, has also led to an increase in Tenneco’s sales. The company also issued a comprehensive annual guide. You now expect annual revenue to be between US$17.6 billion and US$18.1 billion, and adjusted EBITDA between US$1.35 billion and US$1.45 billion. 4,444 shares of Tenneco’s share price fell on Friday’s trading day, closing at 19.81 US dollars, down 1.88 US dollars or 8.67%. Friday’s trend pushed the stock below the 10-day moving average, so there may be new buying points in the near future.
Ireland Adient is a mid-cap stock with shares listed in 2016, which means it can still rise significantly. The share price fell sharply in June but has risen 18.03% so far this year and 143.71% last year. 4,444 stocks fell more than 16% last week and trading volume was 24% heavier than normal. There is no specific news on the company, but mid-cap stocks as an asset class also fell sharply last week.
Additionally, Adient tends to be more volatile than the market in general, and it is not surprising to see profit-taking after a sharp rally. The company manufactures seating systems for passenger cars, light trucks, and commercial vehicles. It is sold to global automakers.
Sales have been declining until the pandemic closed, but this trend may be reversing. In the most recent quarter, Adient reported earnings per share of $ 1.15, an 85% increase over the same period last year. Revenues for were $ 3.819 billion, a 9% year-on-year increase. This is the first revenue increase in eight quarters.
In March, Adient announced the termination of joint ventures in China and will independently promote its own strategy in China. The company stated that this move “is expected to bring various benefits, including growth in profitability and expanding market segments; improved integration of the company’s business in China; and realization of safer value than the status quo. Among them, Cash and value come from dividends from entities not controlled by Adient. “
After slowing earnings in 2019 and a loss of $0.04 per share in 2020, Wall Street expects earnings per share of $3.62 this year and $5.48 per share in 2022. The current correction of
means that the stock cannot be bought at this time and is currently forming a flat base, which means that its peak correction is less than 15%. However, if it slips further in the next few sessions, the base will acquire new characteristics. If it is lower than the previous structural low of US$167.86, it will reset the base, which may be constructive in the long run.
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