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Why Tenneco's Shares Popped 32.7% Today

By Travis Hoium - Aug 6, 2019 at 3:24PM

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Earnings surprised investors by a wide margin.

What happened

Shares of vehicle supplier Tenneco (TEN 1.65%) jumped as much as 32.7% in trading Tuesday after reporting second-quarter 2019 results. Shares gave back some of those gains as the day went on but were still up 15.3% at 3:05 p.m. EDT.

So what

Quarterly revenue jumped 78% to $4.5 billion, and net income was $26 million, or $0.32 per share, down from $47 million a year ago. Adjusted net income was up $1 million to $97 million, or $1.20 per share, down from $1.84 per share a year ago.

Truck hauling logs from a job site.

Image source: Getty Images.

Revenue topped estimates slightly, but the real surprise was the bottom line. Analysts were only expecting earnings of $0.93 per share, so the company easily topped that figure.

Management also said that revenue for the full year would be between $17.6 billion and $17.8 billion, with adjusted EBITDA of $1.52 billion to $1.57 billion.

Now what

Tenneco steadily grew into strong markets like light vehicles, commercial trucks, and off-highway vehicles. The company outgrew the overall market by 9 percentage points, gaining valuable market share. Cost controls also helped adjusted EBIT jump to $141 million versus $111 million a year ago. With a broader footprint and more time to incorporate the Federal-Mogul business, I think the company has more margin expansion ahead.

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