The 10-second takeaway
For the quarter ended June 30 (Q3), Meritor missed estimates on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue shrank and GAAP earnings per share expanded significantly.
Margins improved across the board.
Meritor notched revenue of $1.11 billion. The seven analysts polled by S&P Capital IQ hoped for a top line of $1.23 billion on the same basis. GAAP reported sales were 14% lower than the prior-year quarter's $1.29 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.38. The 11 earnings estimates compiled by S&P Capital IQ predicted $0.39 per share. GAAP EPS of $0.50 for Q3 were 178% higher than the prior-year quarter's $0.18 per share. (The prior-year quarter included -$0.06 per share in earnings from discontinued operations.)
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 11.9%, 150 basis points better than the prior-year quarter. Operating margin was 5.7%, 100 basis points better than the prior-year quarter. Net margin was 4.4%, 310 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $1.17 billion. On the bottom line, the average EPS estimate is $0.37.
Next year's average estimate for revenue is $4.72 billion. The average EPS estimate is $1.18.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 146 members rating the stock outperform and 50 members rating it underperform. Among 49 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 34 give Meritor a green thumbs-up, and 15 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Meritor is outperform, with an average price target of $9.31.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.