On Jan 14, 2015, we issued an updated research report on TRW Automotive Holdings Corp. (TRW). This Zacks Rank #3 (Hold) stock had reported a positive earnings surprise of 3.6% in the last reported quarter.

TRW Automotive posted a 15.1% increase in its third-quarter 2014 earnings to $1.75 per share from $1.52 (all excluding special items) a year ago. Also, earnings per share exceeded the Zacks Consensus Estimate by 6 cents.

TRW Automotive is expanding the Electronics business in order to satisfy the rising demand for automated vehicles. The company is doubling the automated vehicle engineering team so as to fulfill the rising product development demand from Europe, North America and Japan.

TRW Automotive has a strong financial position, which facilitates capital deployment. On Aug 29, 2014, the company completed the $400 million accelerated share repurchase program, which was initiated in Feb 2014. Since 2012, TRW Automotive has repurchased shares worth $1.2 billion.

In addition, TRW Automotive continues to invest in innovative technologies that enable it to win contracts. The company launched many innovative products in the third quarter that have helped it maintain its leadership in safety solutions.

In Dec 2014, TRW Automotive introduced a new version of small pyrotechnic inflator SPI2 EVO with weight and size advantages. This will feature in its new lightweight roof rail airbag for micro- through mid-sized vehicles in Europe and China.

For full-year 2014, revenues are expected to be down from the previous guidance, to $17.4 billion. For fourth-quarter 2014, the company expects revenues to be $4.2 billion, down from the year-ago results. The decline in sales is expected due to the negative impact of businesses exited and currency headwinds. TRW Automotive also faces a challenging situation in Brazil owing to the country’s unfavorable economic conditions which adversely affect vehicle demand and production volume.
 
Key Picks from the Sector

Investors interested in the auto industry could consider better-ranked stocks like Meritor, Inc. (MTOR), PACCAR Inc. (PCAR) and Magna International Inc. (MGA). All these stocks carry a Zacks Rank #2 (Buy).

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