Delphi Automotive (DLPH) Still Offering Growth in 2013

Page 1 of 2

Delphi Automotive PLC (NYSE:DLPH) is a vehicle components manufacturer that provides electrical and thermal technology for autos. Although Delphi is already up over 75% year to date, we still see room for growth in 2013.

Delphi’s 3Q EPS results came in at $0.84 versus $0.72 for 3Q 2011. Strong future performance is expected to come from its recent acquisition of FCI Group’s motorized vehicles division (MVL). The auto company plans to spend $250 million in restructuring costs to integrate MVL, but the savings will be upwards of $80 million for 2013 alone. Billionaire John Paulson is one of Delphi’s biggest investors, owning over 25 million shares (check out John Paulson’s picks).

PAULSON & CO

The chief fundamental driver for the company will be a rise in auto sales. The current average age of vehicles on the road is pushing eleven years. Additionally, MVL’s pre-synergistic EBITDA contribution of $130 million, which is expected to add $0.22 to 2013 EPS, will help out in the short term.

From a valuation standpoint, Delphi is one of the cheapest stocks in the industry at only 8x forward earnings and 7x cash flow. It is hard to see why the auto parts company trades at a such a discount to its peers when it leads in so many areas – including return on equity (60%), 5-year expected EPS growth (18% CAGR) and EBITDA margin (14%). Placing the peer average forward P/E (11x) on Delphi’s 2013 EPS estimates suggests upside of 25% over the next 12 months.

Notable competitor Visteon Corporation (NYSE:VC) supplies climate control and lighting systems for use in autos. The company is on the high-end of the industry’s valuation spectrum at 80x earnings. We tend to agree with many hedge fund investors that Visteon could unlock shareholder value by spinning off its non-core assets and focusing on its climate control business. Following a 40% stake increase, Visteon now calls billionaire Steven Cohen as one of its top investors (check out Steven Cohen’s key picks).

Who’s the best of the rest?

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 High-Paying Jobs You Can Do From Home

12 Best Cities to Shop in USA

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!