Why Meritor (MTOR) Stock Is Up Today

NEW YORK (TheStreet) -- Meritor (MTOR) was gaining 10.3% to $13.10 Thursday after beating analysts' expectations for earnings and revenue in its fiscal second quarter.

For the fiscal second quarter Meritor reported EPS of 22 cents a share, beating the Capital IQ Consensus estimate of 9 cents a share by 13 cents. Revenue grew 5.9% year-over-year to $962 million, beating analysts' estimates of $922.48 million.

Looking to full-year 2014 the company now expects earnings of 50 cents to 60 cents a share, up from its previous guidance of 30 cents to 40 cents a share. Analysts expect EPS of 45 cents a share for the full year. Meritor expects revenue of $3.75 billion to $3.8 billion, while analysts expect $3.7 billion in revenue for the year.

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TheStreet Ratings team rates MERITOR INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate MERITOR INC (MTOR) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and increase in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

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

  • MTOR's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 152.4% when compared to the same quarter one year prior, rising from -$21.00 million to $11.00 million.
  • MERITOR INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MERITOR INC swung to a loss, reporting -$0.21 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.43 versus -$0.21).
  • Powered by its strong earnings growth of 164.70% and other important driving factors, this stock has surged by 176.49% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, however, we cannot assume that the stock's past performance is going to drive future results. Quite to the contrary, its sharp appreciation over the last year is one of the factors that should prompt investors to seek better opportunities elsewhere.
  • The gross profit margin for MERITOR INC is currently extremely low, coming in at 13.12%. Regardless of MTOR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.21% trails the industry average.
  • You can view the full analysis from the report here: MTOR Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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