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TheStreet Open House

How Will Delphi Automotive (DLPH) Stock Respond To IRS Pressure Over U.K. Tax Base?

NEW YORK (TheStreet) -- Delphi Automotive (DLPH) said it would "vigorously contest" pressure by U.S. tax authorities to file taxes in the U. S. as a domestic company, when its tax base is in the U.K., Reuters reports.

The IRS told the auto parts supplier in June that it would be taxed as a U.S. company due to the sale of its assets to Delphi Holdings LLC after it emerged from bankruptcy in 2009, the company said in a regulatory filing on July 31.

Delphi said it was reincorporated in the U.K as a limited liability partnership, which allows it to save tax. The company said it had filed U.S. federal partnership tax returns between 2009 and 2011.

Shares of Delphi are up 0.64% to $67.74

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TheStreet Ratings team rates DELPHI AUTOMOTIVE PLC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate DELPHI AUTOMOTIVE PLC (DLPH) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DLPH's revenue growth has slightly outpaced the industry average of 4.3%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • DELPHI AUTOMOTIVE PLC has improved earnings per share by 7.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DELPHI AUTOMOTIVE PLC increased its bottom line by earning $3.89 versus $3.32 in the prior year. This year, the market expects an improvement in earnings ($5.01 versus $3.89).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Auto Components industry average. The net income increased by 4.1% when compared to the same quarter one year prior, going from $367.00 million to $382.00 million.
  • Net operating cash flow has increased to $627.00 million or 19.88% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.51%.
  • You can view the full analysis from the report here: DLPH Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

 

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