Why Is Cooper-Standard (CPS) Down 41% Since Last Earnings Report?

A month has gone by since the last earnings report for Cooper-Standard (CPS). Shares have lost about 41% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cooper-Standard due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Cooper-Standard Q4 Earnings Miss Estimates, Revenue Tops

Cooper-Standard Holdings Inc. reported adjusted loss of $1.32 per share in fourth-quarter 2019, wider than the Zacks Consensus Estimate of loss of 59 cents mainly due to lower revenues across all the segments. The year-ago quarter’s profit was $1.47 per share.

In the fourth quarter, the company generated revenues of $726 million, lower than the year-ago figure of $872 million. This downside mainly resulted from the UAW work stoppage in the United States and lower-than-planned volumes on certain vehicle programs. However, the revenue figure topped the Zacks Consensus Estimate of $694 million.

During the reported quarter, adjusted net loss was $22.3 million as against the net income of $26.4 million recorded in the year-ago period. Adjusted EBITDA declined to $25.7 million from the $75.7 million recorded in the fourth quarter of 2018.

Segmental Performance

Sales in the North America segment were $368.4 million, down from the year-ago figure of $476.4 million. During the quarter, adjusted EBITDA in the segment came in at $37.5 million, down from the $79.9 million recorded in the prior-year period.

Sales in the Europe segment were $199.96 million, down from the $230.2 million witnessed in fourth-quarter 2018. The segment’s adjusted EBITDA summed 429,000, slumping 91.3% year on year.

The Asia Pacific segment reported sales of $136.9 million in the December-end quarter, down from the $141.8 million generated in fourth-quarter 2018. The segment reported negative EBITDA of $13.7 million compared with the negative EBITDA of $6.5 million witnessed in fourth-quarter 2018.

The company’s South America segment generated sales worth $20.95 million during the reported period, slightly lower than the prior-year quarter’s $22.3 million. However, the segment reported adjusted EBITDA of $1.45 million as against the loss of $2.6 million witnessed in the comparable period last year.

Financials

Cooper-Standard had $359.5 million of cash and cash equivalents as of Dec 31, 2019 compared with $264.9 million on Dec 31, 2018. The company had long-term debt of $746.2 million as of Dec 31, 2019, representing a debt-to-capital ratio of 46%

2020 Guidance

For 2020, the company anticipates sales of $2.85-$3.05 billion. It expects adjusted EBITDA in the $150-185 million band and capital expenditure in the range of $140-$150 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -495.45% due to these changes.

VGM Scores

Currently, Cooper-Standard has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Cooper-Standard has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.