MTOR
Meritor Inc.
Industrial/Transportation
03/24/2014
Presented
| Date | 03/21/2014 |
| Price | $11.88 |
| Market Cap | $1.16B |
| Ent Value | $2.03B |
| P/E Ratio | 5.13x |
| Book Value | N/A |
| Div Yield | N/A |
| Shares O/S | 97.80M |
| Ave Daily Vol | 1,670,000 |
| Short Int | 7.28% |
Current
| Price | $36.50 |
| Market Cap | $2.59B |
| Meritor, Inc. designs, develops, manufactures, sells, markets, distributes, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. It operates in two segments: Commercial Truck and Industrial, and Aftermarket and Trailer. The Commercial Truck and Industrial segment supplies drivetrain systems and components, including axles, drivelines, and braking and suspension systems, primarily for medium and heavy-duty trucks, off-highway, military, construction, bus and coach, fire and emergency, and other applications. The Aftermarket and Trailer segment supplies axles, brakes, drivelines, suspension parts, and other replacement and remanufactured parts, including transmissions to commercial vehicle and industrial aftermarket customers. This system also offers various undercarriage products and systems for trailer applications. The company sells its products under Meritor, Meritor Wabco, Euclid, Trucktechnic, Mascot Truck Parts, and Meritor AllFit brand names primarily to OEMs and its parts marketing operations, dealers, and other independent distributors, as well as service garages in the aftermarket industry. It operates in North America, South America, Europe, and the Asia Pacific. The company was formerly known as ArvinMeritor, Inc. and changed its name to Meritor, Inc. in March 2011. Meritor, Inc. was founded in 1921 and is headquartered in Troy, Michigan. |
Highlights
The presenter is long shares of Meritor (MTOR) because he likes the company’s dominant position in its industry, and sees the potential for greater earnings power as truck production rebounds to more normal levels. Generally speaking, MTOR is under-earning on an EBITDA margin basis. However, Ivor Evans – who took over as Chairman and Chief Executive Officer in August, 2013 – should be able to help guide the company to a more appropriate 10% EBITDA margin. In addition, MTOR previously won a lawsuit against Eaton that has the potential to yield anywhere from zero to hundreds of millions of dollars in damages if a jury finds in the company’s favor in June. With shares of MTOR trading at around $12, the presenter thinks the risk/ reward is favorable at this time.
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