What happened

Shares of Tenneco (TEN) plunged more than 35% on Thursday after the auto parts manufacturer reported quarterly results well below expectations and lowered its full-year guidance. The drop continues a troublesome trend for Tenneco shares, which have now lost more than 70% of their value over the past 12 months.

So what

Tenneco on Thursday morning reported first-quarter earnings of $0.52 per share, badly missing consensus expectations for $0.95 per share, on revenue that matched expectations. The company blamed lower aftermarket -- spare-part and non-automaker -- sales, coupled with China volume declines, for the weakness.

A collection of auto parts.

Image source: Getty Images.

It also lowered its full-year expectations. Tenneco said it now expects to generate sales of between $17.7 billion and $18.1 billion in 2019, down from previous guidance for $18.2 billion to $18.4 billion in sales, and short of the $18.23 billion consensus estimate.

Tenneco is a company in transition, having acquired rival Federal-Mogul last fall for $5.4 billion. It's now planning to split the combined business into two publicly traded entities, one focused on powertrains and the other on aftermarket parts, shock absorbers, suspension systems, and brake parts.

The breakup strategy is favored by activist investor Carl Icahn, the former majority owner of Federal-Mogul and -- after the buyout -- the holder of 9.9% of Tenneco's shares. But Tenneco has pushed the timing of the separation into mid-2020, with the company saying it wants additional time to "allow the two new organizations to align and stabilize business processes and systems, solidify margin and cash flow performance metrics, and strengthen their balance sheets."

Now what

Following the drop, Tenneco looks cheap, trading at just seven times earnings. The issue is that there is no clear catalyst to reverse the downward trend and get the shares moving higher. Instead the outlook is murky, muddied by continued merger integration and a separation that is now more than a year out. Add concerns about the health of the auto market, and it's clear why investors are not jumping in.

Despite how far Tenneco has fallen, there isn't much reason to be confident the shares will outperform the S&P 500 index in the quarters to come.