Stoneridge Stock Has Upside Potential


The small-cap Stoneridge Inc (NYSE: SRI) continues stunning investors aimed at its stunning financial performance and business expansion strategies. SRI share price jumped 26% since the start of this year, extending the twelve-month rally to 56% and three-year growth to 155%. Albeit substantial share price growth, analysts have shown confidence in its future fundamentals.

Analysts Upgraded Stoneridge Stock Price Targets

Stephens upgraded Stoneridge to “weight” rating from “equal” rating, while Zacks Investment Research increased its price target to $27 and upgraded SRI stock to “strong-buy” rating. ValuEngine has also highlighted strong confidence in Stoneridge and increased its rating to “strong buy.”

The company’s lower valuations despite the steady growth in share price support analyst upgrades. SRI stock has the 52-week trading range of $14 to $30 – with the market capitalization of $816 million.

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Its stock currently trades around 15 times to earnings and 0.86 times to sales, compared to the industry average of 21 and 2.13 times, respectively.

Financial Numbers Support the Stock Upgrades

The company’s sales and earnings are increasing at a double-digit rate to balance the stock price uptrend with its valuations. Stoneridge posted year on year sales growth of 18% in fiscal 2017, driven by growth from its all three business segments.

The Control Devices Segment generated year on year sales growth of 10.4% in fiscal 2017, while Electronics segment sales rose 34.9% and PST segment sales jumped by 15.1%.

Jon DeGaynor, President and Chief Executive Officer, said, “Control Devices continued to drive global revenue growth with significant expansion in China and continued success in our actuation and sensor product groups.”

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Outlook Strengthens Bullish Sentiments

Improving global footprints allowed the company to present rosier outlook for FY2018. The company expects to generate sales in the range of $860 million in fiscal 2018 from $824 million in the past year. The potential improvement in gross and operating margin led Stoneridge management anticipates earnings in the range of $2.10 per share for this year, compared to earnings per share of $1.57 in fiscal 2017.

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