Aptiv (APTV) has quietly slipped over the past month, with the stock down almost 9% even as its year to date return still sits solidly positive. That change may present an interesting potential entry point for some investors.
See our latest analysis for Aptiv.
That pullback sits against a much stronger backdrop, with a year to date share price return of 26.65% and a 1 year total shareholder return of 34.76%. This suggests momentum has cooled recently, while the broader trend still looks constructive.
If Aptiv has caught your eye, it can also be worth seeing how other auto suppliers are trading right now by scanning auto manufacturers for fresh ideas.
With shares pulling back despite double digit annual gains and trading at a hefty discount to analyst targets, investors now face a key question: is Aptiv undervalued or is the market already pricing in its future growth?
With Aptiv last closing at $76.37 versus a narrative fair value of $98.24, the story points to meaningful upside if its transformation plays out.
Spin off of the Electrical Distribution Systems (EDS) business and continued execution on footprint optimization/cost structure initiatives are expected to unlock shareholder value, create balance sheet flexibility, and allow for greater strategic focus on software and high growth advanced electronics areas, with positive impact on net margins and long term earnings growth.
Read the complete narrative.
Want to see what kind of revenue runway, margin lift, and future earnings multiple are baked into that upside case? The projections behind this fair value lean heavily on accelerating profit growth, rising software like economics, and a leaner post spin business mix. Curious how those moving parts combine into that target price and what has to go right along the way?
Result: Fair Value of $98.24 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, that upside depends on resilient auto demand and a smooth EDS separation, as macro softness or execution missteps could easily derail the profitability narrative.
Find out about the key risks to this Aptiv narrative.
Step away from the narrative of fair value and the picture looks less forgiving. On a price-to-earnings basis, Aptiv trades at 55.9 times, well above the Auto Components industry at 18.7 times, the peer average at 26.6 times, and even its own 46.7 times fair ratio. Is the market already front loading too much optimism?
See what the numbers say about this price — find out in our valuation breakdown.