Tenneco designs, manufactures and sells clean air and ride performance systems and products for light vehicle, commercial truck, off-highway and other applications. Co. serves both original equipment manufacturers and replacement markets through brands. As a parts supplier, Co. produces individual component parts for vehicles as well as groups of components that are combined as modules or systems within vehicles. Co. has six operating segments: North America Clean Air; North America Ride Performance; Europe, South America and India Clean Air; Europe, South America and India Ride Performance; Asia Pacific Clean Air and Asia Pacific Ride Performance.
In our opinion TEN has an economic moat as evidenced by its substantial global manufacturing presence, has highly integrated and long-term customer ties, enjoys steep customer-switching costs, has relatively moderate pricing power, and benefits from a globally oligopolistic emissions market.
TEN is facing some pressures this year. Currency pressures from strength of the U.S. dollar is having an effect. TEN is experiencing a slowdown in the commercial operations, which are being hampered by lower production volumes of agriculture, construction, and other off-road vehicles. TEN is becoming a leaner, more efficient outfit than it has been in the recent past. he growth story should resume in earnest in 2016. Aside from cost reductions, heightened global demand for environmentally friendly emissions controls ought to jump-start the bottom line by next year. Demand should be especially brisk in China. Tenneco is buying back stock. The stock holds appeal as a long-term play.
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Strong market position and brand equity in global marketplace enables to deliver sustainable growth
Focus on continuous innovation enhances competitive strength over peers
Global footprint enables to capture new business
High dependence on General Motors and Ford Motor impacts the profitability
Substantial leverage would create a competitive disadvantage
Intense competition could impacts sales and margins
Longer product lives of automotive parts could impact the revenue base
New regulations related to conflict-free minerals could impact financial condition
Benefits from increasingly stringent environmental requirements
Growing commercial vehicle business could increase market presence
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The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.