Tuesday, February 23, 2016

Seeking Alpha: Tenneco Zigging When Others Zag

When gas prices were high and Class 8 truck orders were rolling in, Tenneco (NYSE:TEN) didn't look as strong as other vehicle part and component suppliers like Allison Transmission (NYSE:ALSN), BorgWarner (NYSE:BWA), and Cummins (NYSE:CMI). While the ABCs are now suffering from concerns about the health of the truck market, the impact of lower gas prices, and the future of the internal combustion engine (or ICE) powertrain, Tenneco seems better-placed for today's circumstances.

Relative to Cummins, I think Tenneco's emissions control business is well-positioned given its exposure to passenger and off-highway vehicles, and I think the company's also in a good position to take advantage of stronger near-term demand for bigger passenger vehicles. The long-term future of ICE powertrains in the passenger segment is a point to consider, but I believe Tenneco is still undervalued if it can generate 3% to 4% long-term revenue growth with a modest improvement in free cash flow generation.

Read the full article here:
Tenneco Zigging When Others Zag

No comments: