Tenneco Reports Great Earnings, But Guidance Disappoints

Traders are liquidating Tenneco TEN on the back of weak guidance, despite earnings and sales results that beat analyst consensus estimates.

Tenneco closed Monday at $67.35, down 1.13 percent.

Peers in the space, such as Johnson Controls JCI and TRW Automotive Holdings TRW were also slightly down in the session.

Tenneco reported earnings per share of $1.32, which comes in ahead of analyst consensus earnings estimates of $1.26; EPS for Q2 in the previous fiscal year was $1.10.

Tenneco reported revenue of $2.241 billion, which grew by eight percent year-over-year. Revenue beat analyst estimates by $19 million.

Tenneco’s EBIT margin also grew by 12 percent year-over-year to $166 million. The $0.08 beat on earnings came as a result of revenue growth and through improvements in the company’s cost structure.

Tenneco CEO and Chairman Greg Sherrill said:
"I am pleased with our performance in the first half of the year and expect volume strength and our manufacturing performance to continue driving profitable growth in the third quarter. We are capitalizing on a strong global light vehicle production environment, our commercial truck and off-highway business continues to expand with excellent growth, and we expect a solid contribution from the global aftermarket."

Tenneco is expecting light vehicle production to increase five percent year-over-year for the next fiscal quarter. Tenneco’s commercial truck and off-highway business is expected to increase 20 to 25 percent in the next quarter.

Deceleration may have sparked a bit of selling on the session; 20 to 25 percent year-over-year growth in the commercial truck and off-highway business is below the year-over-year growth of 27 percent in the current quarter.