Like Dana (DAN), Tenneco (TEN)
looks like a vehicle supplier that's been pounded down pretty hard, and
with the shares down about 25% over the past year, maybe a little too
hard. There are some legitimate concerns about margin weakness and the
prospect of weaker unit volumes in both the passenger and commercial
vehicle businesses, not to mention the company's mixed future in the
hybrid/EV world and the risks that will come with integrating Federal Mogul and then splitting the business.
Even
so, I think the valuation seems to overstate those risks. It's hard for
me to advocate strongly for Tenneco given its not-so-impressive FCF
generation over the years, but given the possibility that the merger and
split will finally unlock some of the value in Ride Performance and
arguably the overly pessimistic market opinion of the Clean Air
business, this is a name worth some due diligence.
Keep reading here:
Tenneco Hoping That Doubling, Then Halving, Makes 1+1=2+
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