Seeking Alpha: Still Waiting For Tenneco's Margin And CV Leverage

On at least one level, Tenneco (TEN) offers a compelling story. European governments take emissions control fairly seriously, China is starting to take it more seriously, and while the commitment in the U.S. seems to wobble from administration to administration (or Congress to Congress), it has been marching toward higher standards. As the second-largest emissions player in the world (with around 22% share in light vehicles and 10% share in commercial vehicles), that should feed ongoing growth for Tenneco.

The problem is less about the story and more about the timing and valuation of that opportunity. Bullish analysts have been pushing a margin leverage and commercial vehicle growth story for a little while now, but the timelines keep sliding to the right. I don't disagree that Tenneco will get there, but the timing does have valuation implications. Although Tenneco's long-term DCF-based valuation isn't so impressive, the recent sell-off has pushed the price to a more attractive level on an EV/EBITDA basis.

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Still Waiting For Tenneco's Margin And CV Leverage