Delphi Automotive PLC (Delphi or "the company") is a manufacturer and supplier of automotive components and modules to original equipment manufacturers (OEMs) and aftermarket. The company primarily operates in the Americas, Europe, Asia and Africa. Delphi is headquartered in Kent, the UK.
In our opinion, Delphi’s moat is dug from its intellectual property, high customer switching costs, and cost advantage. Sticky market share and cost advantages result from Delphi's global engineering and manufacturing footprint as well as its long-term highly integrated customer relationships. Delphi was named on more than one occasion by the editors of MIT's Technology Review magazine as the auto-parts industry's leader in intellectual property and has won several PACE Awards for technological innovation from the editors of Automotive News. The company currently owns about 5,500 patents, up from 2,000 that General Motors left Delphi in its 1998 spin-off.
Delphi Automotive ended 2014 in good fashion and should continue to perform well in 2015. The company's restructuring efforts remain on track. These initiatives, which are largely based in Europe and South America, should further align Delphi's manufacturing capacity and footprint with current automotive production levels. During 2014, the company returned $1.3 billion to shareholders through stock repurchases and dividends. The board of directors also approved a new stock-repurchase plan of up to $1.5 billion. This program will take effect once DLPH's current authorization is completed. The stock offers below-average price appreciation potential out to 2018-2020.
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Broad product portfolio and balanced revenue streams enables to tap opportunities in new markets
Robust market presence enables to charge premium prices and register higher margins
Low customer concentration affects the financial position
Legal proceedings affect the results of operations
Intense competition forces to reduce prices, which in turn could strain margins
Environmental regulations leading to high remediation costs
Disruptions in the supply of raw materials and other supplies impacts the results and margins
Rise in demand for hybrid cars
Recovery of automotive market in the US
Acquisitions to enhance competitiveness of electrical connectors business
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