A Buyback Accelerates This Auto Stock

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Isaac Pino and research analyst Blake Bos discuss topics around the investing world.

During early trading today, shares surged at TRW Automotive, an auto supplier that makes a variety of electronic safety systems for autos, including adaptive cruise control, collision monitoring, and replacement parts. By the market's close, TRW's stock had risen more than 7% because of the announcement of a $1 billion buyback, totaling 17% of the company's market cap. The buyback reduces tradable shares outstanding by 20%.

The market responded positively to the buyback for several reasons. First off, the shares are trading at a price-to-earnings ratio of 6 -- less than half of the S&P 500 market average -- which could lead investors to believe that management is taking advantage of underpricing. Secondly, management's repurchase could signal that the fallout of the European car market looks less severe down the road than previously expected. Finally, the announcement could hold clues to the outcome of a pending antitrust case involving TRW. Isaac and Blake dive into the nuances of the announcement in the following video.

With a significant portion of its sales stemming from Europe, the outlook for this market will be the most crucial factor to watch for TRW. 

Right now, the entire industry seems plagued with oversupply issues on the all-important European continent, which has weighed heavily on shares of automaker Ford in recent weeks. Trading only marginally higher than it was a year ago, Ford's stock seems stuck in neutral. Does this create an incredible buying opportunity, or are there hidden risks with the stock that investors need to know about? To answer that, one of our top equity analysts has compiled a premium research report with in-depth analysis on whether Ford is a buy right now, and why. Simply click here to get instant access to this premium report.


Blake Bos and Isaac Pino have no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2039163, ~/Articles/ArticleHandler.aspx, 10/28/2016 5:47:30 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,161.19 -8.49 -0.05%
S&P 500 2,126.41 -6.63 -0.31%
NASD 5,190.10 -25.87 -0.50%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/28/2016 4:00 PM
F $11.72 Down -0.02 -0.17%
Ford CAPS Rating: ****
GM $31.32 Down -0.01 -0.03%
General Motors CAPS Rating: ***
TRW.DL $105.46 Down +0.00 +0.00%
TRW Automotive Hol… CAPS Rating: ****