Valeo In A Lull, But Bringing In The Orders

I continue to be both frustrated and intrigued by Valeo (OTCPK:VLEEY) (VLOF.PA). When I last wrote about this large auto parts supplier, I wrote that there was a credible risk of near-term disappointment in revenue and margins and that has come to pass. The local shares are down about 6% from the time of that last article, lagging peers like Continental AG (OTCPK:CTTAY), Autoliv (ALV), BorgWarner (BWA), Schaeffler (OTC:SFFLY), and Faurecia (OTCPK:FURCY), though the performance since my first write-up in 2014 has been solid.

While the near-term weakness is certainly a drag, the company's strong order flow is quite encouraging, and particularly so in the hybrid/EV joint venture with Siemens (OTCPK:SIEGY). Valeo shares could struggle a bit for another couple of quarters, but I like the valuation here and the long-term opportunity to leverage future growth in hybrid and electric vehicles.

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Valeo In A Lull, But Bringing In The Orders