Aptiv Issues Weak Profit Guidance Amid Goodwill Impairment
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: seekingalpha
- Weak Profit Guidance: Aptiv anticipates margin compression for Q4, despite better-than-expected sales, with adjusted EPS at $1.86, reflecting a net income margin of only 2.7%, down from 5.5% last year, indicating financial strain.
- Full-Year Performance Impact: The non-cash goodwill impairment charge led to GAAP net income of $165 million and a net income margin of 0.8%, a stark decline from last year's $1.78 billion and 9.1%, highlighting significant financial challenges.
- Sales Forecast Adjustments: Aptiv expects FY26 net sales between $21.12 billion and $21.82 billion, with a midpoint of $21.47 billion exceeding the consensus of $21.19 billion, yet Q1 sales projections fall short of analyst expectations.
- Spin-Off Prospects: The planned spin-off of its Electrical Distribution Systems business into Versigent is expected to significantly impact Aptiv's future financial performance, particularly with adjusted EPS guidance ranging from $8.15 to $8.75, slightly below the consensus estimate of $8.49.
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Analyst Views on APTV
Wall Street analysts forecast APTV stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for APTV is 99.20 USD with a low forecast of 84.00 USD and a high forecast of 107.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
10 Analyst Rating
8 Buy
2 Hold
0 Sell
Strong Buy
Current: 75.750
Low
84.00
Averages
99.20
High
107.00
Current: 75.750
Low
84.00
Averages
99.20
High
107.00
About APTV
Aptiv PLC is a Switzerland-based Company primarily engaged in automotive industry. The Company operates through two segments: Signal and Power Solutions and Advanced Safety and User Experience. The Signal and Power Solutions segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including engineered component products, connectors, wiring assemblies and harnesses, cable management, electrical centers and high voltage power and safety-critical data distribution systems. The Advanced Safety and User Experience segment provides technologies and services to enhance vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, cloud-native software platforms, application software, autonomous driving technologies and end-to-end DevOps tools
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Aptiv Q4 Earnings Preview: Expectations and Insights
- Earnings Release Date: Aptiv PLC is set to release its Q4 earnings before the market opens on February 2, with analysts projecting earnings per share of $1.86, an increase from $1.75 in the same quarter last year, indicating ongoing improvement in profitability.
- Revenue Expectations: The anticipated quarterly revenue is $5.11 billion, up from $4.91 billion a year ago, reflecting the company's positive performance amid recovering market demand, which could bolster future investment confidence.
- Q3 Performance: On October 30, Aptiv reported stronger-than-expected Q3 earnings, surpassing Wall Street forecasts, showcasing improvements in operational efficiency and market adaptability, thereby enhancing investor confidence in future growth prospects.
- Stock Price Movement: Despite positive fundamentals, Aptiv's stock fell 3.9% to close at $75.75 last Friday, indicating a cautious market sentiment ahead of the upcoming earnings report, which may affect short-term investor attitudes.
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Aptiv Reports Q4 2025 Results with Mixed Performance
- Financial Overview: Aptiv reported Q4 2025 revenue of $5.153 billion, a 5% increase year-over-year, with North America and South America growing by 8% and 12% respectively, while Europe and Asia saw declines of 1%, indicating a divergence in regional market performance.
- Adjusted EPS Performance: The company posted an adjusted EPS of $1.86, surpassing the analyst estimate of $1.85, although GAAP earnings declined due to higher tax expenses, reflecting a complex relationship between cost control and market demand.
- Capital Return and Debt Status: In 2025, Aptiv repurchased 22.8 million shares for $1.5 billion, with short-term debt at $81 million and long-term debt at $7.47 billion, demonstrating proactive capital management strategies.
- Future Outlook and Spin-Off Plans: Aptiv forecasts Q1 2026 net sales between $4.950 billion and $5.150 billion, and plans to spin off its Electrical Distribution Systems business into Versigent, aiming to enhance market flexibility and capital allocation for both entities.
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