Nevertheless, not all is air-clean for Tenneco Inc (NYSE:TEN). Although the company was able to establish a world-wide-web with automakers, its aftermarket demand is not as high. In other words, the company provides for automakers, not auto-owners. Also, there is not much to be invented in the business and improvements are imitated by competitors, limiting returns on R&D.
Tenneco Inc (NYSE:TEN), however, has overcome many market and competition obstacles, reflecting such victories upon its financial fundamentals. Historically, the company seems to be at an all-time high, and as noted by MorningStar, the company has increasingly reduced its debt from 4.2 to 2.5 times –making it a historical high. In conclusion, given Tenneco’s cheaper stock price, lesser client and financial exposure when compared to competitors, it is recommended to buy.
Main player in the auto parts industry
Genuine Parts Company (NYSE:GPC) will be the greatest auto parts distributor in North America and Australia as of next month, after completing the acquisition of Exego. The company’s business is to manufacture and deliver auto parts, and it counts with the largest truck fleet to accomplish the mission. But, even as cars turn old and replacements are needed, car manufacturers modifying marketing and service strategies strongly impact Genuine’s future prospects.
More products, new markets, and operational costs cuts have had a positive impact on the company’s overall finance sheet. Throughout 2012, Genuine Parts Company (NYSE:GPC) increased earnings and saw a cash increment of 45%. During 2013, the company has achieved well above historical average profitability and financial figures. Such numbers are proof of the positive effects acquisitions had on balance sheets and market share.
The time for auto parts distributors, regardless of their size, seems to have reached its highest peak. Genuine Parts Company (NYSE:GPC)’s P/E ratio has been standing still and the reason may be found in the automotive structural changes. During economic slowdowns, average miles driven are cut short and the demand for auto parts replacements decreases. On the other hand, during economic upturns, individuals prefer to buy a brand new car. Brand new cars offer longer guarantees and specialized assistance, leaving the middleman out of the equation.
The garage days are over. With new cars incorporating ever more complex technology, individuals will be required to incorporate more technical knowledge, affecting the capacity to fix one’s own car in the garage. Also, retail shops have begun to cut short the middleman, going straight to the manufacturer while the price of Genuine Parts Company (NYSE:GPC)´s stock remained on the rise. Last, in the face of a relatively expensive stock with poor prospects for the years to come, it is recommended to hold this stock.