Tenneco (TEN) reports third-quarter loss, top revenue estimates

Tenneco (TEN) came out with quarterly loss of $0.14 per share versus the Zacks Consensus Estimate of $0.75. For comparison, a year earlier earnings per share were $0.17. These numbers have been adjusted for one-off items.

This quarterly report represents an earnings surprise of -118.67%. A quarter ago, it was expected that this auto parts maker would post earnings of $0.52 per share when it actually produced a loss of $0.82, delivering a surprise of -257.69%.

The company has failed to beat consensus EPS estimates over the last four quarters.

Tenneco, which belongs to the Zacks Automotive – Original Equipment industry, posted revenues of $4.93 billion for the quarter ended September 2022, surpassing the Zacks Consensus Estimate by 1.85%. For comparison, year-ago revenues were $4.33 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

Year-to-date, Tenneco shares are up about 73.9% compared to the S&P 500’s decline of -18.2%.

What’s next for Tenneco?

While Tenneco has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of the earnings release, the estimate revision trend for Tenneco is unfavorable. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #5 (Strong Sell) for the stock. Therefore, it can be expected that the company’s shares will underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.70 on revenue of $4.76 billion for the coming quarter and $0.53 on revenue of $18.88 billion for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, Automotive – Original Equipment is currently in the bottom 31% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another company in the same industry, Luminar Technologies, Inc. (LAZR), has not yet released results for the quarter ended September 2022.

The company is expected to report quarterly loss of $0.21 per share in its upcoming report, representing a year-over-year change of -110%. The consensus EPS estimate for the quarter has been revised 0.8% down to the current level over the last 30 days.

Luminar Technologies, Inc. revenues are expected to be will amount to USD 9.15 million, which means an increase of 14.7% compared to the same quarter last year.

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