Zacks_Analysts' Blog : Tenneco to Support Nissan March - Analyst Blog

Tenneco Inc. (TEN) announced that it has started supplying emission and ride control systems to Japan’s Nissan Motor (NSANY) for its global supermini compact car, March (also known as Micra in some regions including India).

The systems are manufactured in the company’s Asian operations. They include new manufacturing plants in Chennai and Hosur in India; Guangzhou, China and in Chonburi, Thailand. However, Tenneco has designed and developed the products (including shock absorbers and exhaust systems) in its engineering centers in Asia, Europe and North America.

Tenneco’s diversified platform mix has helped win significant business. About a third of the company’s business since 2007 has been established in Brazil, Russia, India, China and Thailand, 80% of which is for small cars.

In the third quarter of the year, Tenneco recorded a profit of $24 million or 39 cents per share (before special items), significantly up from $3 million or 7 cents per share (before special items) in the same quarter of previous year. However, the company’s profit barely exceeded Zacks Consensus Estimate by a penny during the quarter.

Revenues in the quarter rose 23% to $1.54 billion on the back of higher original equipment (OE) production volumes across all the regions (especially in North America) and strong aftermarket sales globally.

Despite the strong results and global position, Tenneco faces pricing pressure from OEMs. As a result, the company retains a Zacks #3 Rank (Hold) on its stock for the short term (1–3 months) and we reiterate our 'Neutral' recommendation for the long term (more than 6 months).