About Sensata Technologies
Sensata Technologies Holding plc develops, manufactures, and sells sensors and sensor-rich solutions, electrical protection components and systems, and other products used in mission-critical systems and applications in the United States and internationally. It operates in two segments, Performance Sensing and Sensing Solutions. The Performance Sensing segment offers pressure, temperature, and position sensors, high-voltage solutions, and other solutions used in mission-critical systems and applications, such as tire pressure monitoring, thermal management, electrical protection, regenerative braking, powertrain for engine/transmission, and exhaust management for automobiles, on-road trucks, and off-road equipment customers. The Sensing Solutions segment provides application-specific sensor and electrical protection products, such as pressure, temperature, and position sensors; motor and compressor protectors; high-voltage contactors; solid state relays; bimetal electromechanical controls; power inverters; charge controllers; battery management systems; operator controls; and power conversion systems. It serves automotive, on-road truck, construction, and original equipment manufacturers in agriculture, control, appliance, medical, energy and charging infrastructure, data/telecom, and aerospace and defense industries, as well as systems integrators, aerospace, and motor and compressor distributors. Sensata Technologies Holding plc was founded in 1916 and is headquartered in Attleboro, Massachusetts.
Sensata Technologies Company News
Sensata Technologies Holding (NYSE:ST) Third Quarter 2024 Results
Key Financial Results
Revenue: US$982.8m (down 1.8% from 3Q 2023).
Net loss: US$25.0m (down by 140% from US$62.8m profit in 3Q 2023).
US$0.17 loss per share (down from US$0.41 profit in 3Q 2023).
Sensata Technologies Holding EPS Misses Expectations
Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates.
Looking ahead, revenue is forecast to grow 2.7% p.a. on average during the next 3 years, compared to a 8.4% growth forecast for the Electrical industry in the US.
Sensata Technologies Inc. Rating
Sensata Technologies
Morningstar Price/Fair Value: 0.54
Morningstar Uncertainty Rating: High
Morningstar Economic Moat Rating: Narrow
Industry: Scientific & Technical Instruments
Trading 46% below our fair value estimate, narrow-moat Sensata Technologies tops our list of best tech stocks to buy. The firm is a global supplier of sensors for transportation and industrial applications. We think Sensata stock is worth $58 per share.
We think Sensata Technologies is a differentiated supplier of sensors and electrical protection, predominantly for the automotive market. The firm has oriented itself to benefit from secular trends toward electrification, efficiency, and connectivity. Despite the cyclical nature of the automotive and heavy vehicle markets, electric vehicles and stricter emissions regulations provide Sensata the opportunity to sell into new sockets, which has allowed the firm to outpace underlying vehicle production growth by about 4% historically. We think such outperformance is achievable over the next 10 years, given our expectations for a fleet mix shift toward EVs and Sensata’s growing addressable content in higher-voltage vehicles.
In our view, Sensata’s ability to grow its dollar content in vehicles demonstrates intangible assets in sensor design, as it works closely with OEMs and Tier 1 suppliers to build its products into new sockets. We also think the mission-critical nature of the systems into which Sensata sells gives rise to switching costs at customers, leading to an average relationship length of roughly three decades with its top 10 customers. As a result of switching costs and intangible assets, we believe Sensata benefits from a narrow economic moat and will earn excess returns on invested capital for the next 10 years.
Over the next decade, we expect Sensata to focus on organic growth in EVs and increasingly electrified industrial applications. The firm has historically been an active acquirer but is focusing on organic investment, reduced leverage, and increased shareholder returns in the medium term, of which we approve. The firm’s ability to grow content in electric vehicles and outperform underlying global automotive production are the primary drivers of our investment thesis.
Although Sensata Technologies’ performance was not as good as expected, it is still worth buying.