Why Tenneco Shares Surged

Before you go, we thought you'd like these...
Before you go close icon

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of auto parts-maker Tenneco (NYS: TEN) were roaring higher today, gaining as much as 18% on better-than-expected earnings.

So what: Adjusted EPS for Tenneco, which makes emission control systems, came in at $0.85 a share, beating estimates of $0.75 and last year's per-share profit of $0.67. That total did not include a $74 million gain from the reversal of a tax valuation allowance. Revenue growth was less impressive, as it was essentially flat at $1.78 billion, short of estimates of $1.82 billion. Management expressed concerns about economic weakness in Europe, but counteracted that with increasing sales in North America and Europe.


Now what: Shares had come down about 50% from highs reached back in the spring before today's announcement so investors were happy to pounce on some good news. Tenneco seems to have overcome the cyclical weakness we've seen in many parts of the auto industry, but flat revenue growth should signal that it's not out of the woods yet. Keep an eye on that figure, as upward momentum will be limited without an increase in sales.

Want to keep track of Tenneco? Add Tenneco to My Watchlist.

The article Why Tenneco Shares Surged originally appeared on Fool.com.

Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners