Delphi beats on Q4, share price rises
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Delphi beats on Q4, share price rises

Delphi Automotive, one of the world’s leading players in the auto-parts sector, reported 4Q2016 earnings last week that beat consensus estimates and sent its share price higher. So, we took a look at the numbers and just why they have performed so well.

Delphi delivered profit of $1.83 per share, smashing Wall Street expectations of $1.60, and posted revenue of $4.3 billion against expectations of $4.1 billion. The company’s revenue rose 11% from the year-ago quarter, when its earnings per share came in at $1.39. The company’s guidance remained solid, but not fanciful, and is more-or-less in line with current estimates going forward. The share price jumped 4% on the day.

Delphi’s earnings lifted their share price last week

SOURCE: Yahoo Finance

One of the ways in which Delphi manages to deliver high profits against relatively low costs is by employing workforces in “best-cost countries” such as Mexico. For this reason, as it was releasing earnings, it also felt compelled to discuss some of the controversy regarding President Trump’s attempts to revitalise American manufacturing jobs. According to Delphi, any work that it brings back from Mexico is likely to be automated.

Speaking to the press shortly after the company released earnings, Delphi’s chief financial officer, Joe Massaro, said:

“There are certainly more automated-type manufacturing processes down there [in Mexico] that we could conceivably see coming back, or coming to the U.S. We’ll look at that depending on where the rules go, but it would have to be of much more of the automated-type manufacturing operations, just given the labour [cost] differential there.”

Dominion holds Delphi Automotive in its Global Trends Managed Fund. 

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