TRW Automotive - Aggressive Growth

TRW Automotive Holdings Corp (TRW) is trading at its highest levels in more than 5 years, thanks to strong management and an industry-wide recovery.

Thanks to rising estimates, this Zacks #1 Rank (Strong Buy) is trading at a good value on top of its multiplying earnings.

Company Description

TRW Automotive is one of the biggest auto suppliers in the world. The company makes vehicle control and driver assist systems, braking systems, seat belts, airbags and many other components that go into automobiles.

Flawless Earnings History

On Nov 3 TRW Automotive continued its steak of beating quarterly earnings estimates, which it has done for more than 4 years. Sales for the third quarter were up 10% to $3.4 billion.

Net earnings for TRW Automotive came in at $189 million, which is more than double the $76 million from one year ago. On a per share basis that is $1.47, well ahead of the 78 cents the consensus was calling for.

Confident Outlook

John Plant, TRW Automotive's President and CEO, commented on the industry's overall recovery and the company's success in emerging markets.

Analysts couldn't help but agree. The full-year consensus is up 96 cents in the past 3 months, to $5.84. Next year's forecasts are up a dollar on average, to $6.15. TRW Automotive earned just $1.26 last year, making the projected 2-year growth rate an impressive 488%.

The Chart

Shares took a hit in mid November when its largest investor announced that it was selling its stake in the company. However, that was not enough to hold back TRW, which went on to set another high and is now at the highest level since 2002.

So we would be over paying, right? Wrong. Shares are still going for less than 9 times forward estimates. The price to sales is at 0.44 times, better than the industry average of 0.54.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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