What: Shares of heavy equipment parts supplier Meritor (NYSE:MTOR) were down 9.8% at 11 a.m. ET on Wednesday after its quarterly results and outlook missed Wall Street expectations.
So what: Meritor shares have been walloped over the past six months due to its heavy exposure to the slowing global economy, and today's poor Q1 results -- adjusted EPS of $0.33 missed the consensus by $0.04 on a revenue decline of 8% -- coupled with downbeat full-year guidance only reinforce those macro headwinds. In fact, sales in the company's commercial truck and industrial segment fell $70 million to $633 million on currency weakness in Europe and Brazil, as well as economic softness in South America, giving analysts plenty of negative vibes over its near-term turnaround prospects.
Now what: For the full year, management now sees adjusted EPS of $1.65-$1.75 on revenue of $3.4 billion, down from its prior view of $1.70-$1.80 and $3.4 billion-$3.5 billion. "Despite the impact of lower production expectations in North America, we continue to execute well," said President and CEO Jay Craig. "Following another strong quarter, we remain committed -- and on track -- to achieving our M2016 metrics for margin enhancement, debt reduction and new business wins." Given Meritor's still-hefty debt load, sensitivity to macroeconomic weakness, and highly volatile shares, however, I wouldn't bet too heavily on that bullishness.
Brian Pacampara has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.