After announcing better than expected second quarter results
this morning, shares of automotive aftermarket parts company Motorcar Parts of
America (MPAA 21.20, +2.07, +10.8%) trade to three-month highs, extending gains
during their recent three-session winning streak to 30.3%.
The results were strong for MPAA; net sales rose 16% to $127.9 mln, predominantly as a result of increases in the company’s rotating electrical business. What’s more, adjusted net income for the quarter was $0.60 per diluted share, compared with $0.52 per diluted share a year ago.
Adjusted gross profit for Q2 was $36.0 mln compared with $32.0 mln a year ago. Adjusted gross profit as a percentage of adjusted net sales for the three months was 27.6%, down about 60 basis points from a year earlier, impacted by higher freight-related costs compared with the prior year and stock adjustment accruals for future update orders.
Management stated that, in addition to the company’s recent acquisition of E&M Power, MPAA expects to close another strategic tuck-in acquisition this week that will enhance its existing product line offerings.
Looking ahead, MPAA reaffirmed its annual adjusted sales guidance of between 6.5-8.5% growth year/year and indicated that it expects to reach the higher end of this range. At this juncture, the company estimates that adjusted gross margin for fiscal 2019 will arrive at the lower end of the company’s previous guidance of 27.0-30.0%.
Particularly interesting, shares of MPAA opened above the 200-day simple moving average (20.98) this morning but have since come back to near that level; investors are perhaps employing a “sell-the-news” mentality in the wake of stock price that has been declining since the start of last September.
At one point this morning, MPAA’s stock had pushed up 23.6%.
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