Sensata Executing And Building A Long-Term Growth Story, But Still Undervalued

 

Sensata (ST) has been outperforming sell-side expectations and converting sell-side skeptics to believers, leading to a 40%-plus increase in the average Street price target since my last update, but it hasn’t really helped where it counts most – Sensata’s share price is down a bit from my last update. They’re not alone, Aptiv (APTV) shares have been weak too, but a broad set of comparables like Amphenol (APH), NXP Semiconductors (NXPI), and TE Connectivity (TEL) have managed better returns.

At some point I do think that Sensata will get its due – not just for the quality of the underlying business, but also the company’s leverage to vehicle electrification (passenger and commercial), to increased aerospace electrification, and to telematics. I believe the shares are about 10% to 20% undervalued today and would still offer high single-digit long-term annualized return potential beyond that, making this a name to consider.

 

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Sensata Executing And Building A Long-Term Growth Story, But Still Undervalued