ST - Embedded Expectations Analysis - 2019 07 29
Sensata Technologies (ST:USA) currently trades near historical averages relative to Uniform Earnings, with an 18.6x Uniform P/E. At these valuations, markets are pricing in bearish expectations for the firm, and management has concerns about growth, CapEx, and their supply chain.Specifically, management may be concerned about sustained operating margin headwinds and about revenue growth in their Sensing Solutions business. Moreover, management may be overstating their expectations for the adoption of their Wireless Gateway products, and they may be concerned about the sustainability of recent content growth. Additionally, management may be concerned about sustained weakness in WLTP and supply chain bottlenecks due to emissions regulation in Europe. Finally, management may be concerned about declining automotive end market production, and they may lack confidence in their ability to meet full year capital expenditure guidance.
Sensata Technologies Holding is a holding company. Co. conducts its business through subsidiary companies, which operate business and product development centers in the U.S., the Netherlands, Belgium, China, Germany, Japan, South Korea, and the U. K.; and manufacturing operations in China, Malaysia, Mexico, Bulgaria, Poland, France, Germany, the U.K., and the U.S. Co. is engaged in the development, manufacture and sale of sensors and controls. Co. produces a range of sensors and controls for applications such as pressure sensors in automotive systems, and thermal circuit breakers in aircraft, among others. Co.'s operations has two businesses, Performance Sensing and Sensing Solutions.
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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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