What happened
Shares of Tenneco, a manufacturer of automotive products for original equipment manufacturers (OEMs) and aftermarket consumers, jumped as much as 19.2% Wednesday morning before giving back some gains. It had delivered a solid fourth-quarter performance.
So what
Starting from the top, Tenneco’s fourth-quarter revenue increased 12% over the prior year to reach $4.7 billion. That result easily topped analysts’ estimates calling for $4.3 billion. Adjusted net income also checked in with a large beat at $1.68 per share, compared to analysts’ estimates of $1.01 per share. Management’s “Acelerate+” program drove margin expansion and is on pace to hit $265 million in annual run rate savings by the end of 2021. With margin improvements and strong cash flow generation, the company was able to reduce its net debt by $460 million from the end of the previous year.
Now what
In addition to its strong financial performance during the fourth quarter, the company improved its liquidity from $1.8 billion at the end of the third quarter to $2.3 billion at year end. Investors should feel optimistic that management has successfully navigated the COVID-19 pandemic and can take its momentum in margin expansion, cash generation, and debt reduction into a strong 2021, which shouldn’t be taken for granted in the hit-or-miss automotive industry.
Should you invest $1,000 in Tenneco right now?
Before you consider Tenneco, you’ll want to hear this.
Investing legends and Motley Fool Co-founders David and Tom Gardner just revealed what they believe are the 10 best stocks for investors to buy right now… and Tenneco wasn’t one of them.
The online investing service they’ve run for nearly two decades, Motley Fool Stock Advisor, has beaten the stock market by over 4X.* And right now, they think there are 10 stocks that are better buys.