NYSE:MTOR

Stock Analysis Report

Executive Summary

Meritor, Inc. designs, develops, manufactures, markets, distributes, sells, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors.

Rewards

Trading at 15.2% below its fair value

Earnings grew by 141.7% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -6.2% per year for the next 3 years

Has a high level of debt

Highly volatile share price over past 3 months



Snowflake Analysis

Solid track record with adequate balance sheet.


Similar Companies

Share Price & News

How has Meritor's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: MTOR's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-1.8%

MTOR

1.1%

US Machinery

1.2%

US Market


1 Year Return

25.3%

MTOR

19.2%

US Machinery

24.2%

US Market

Return vs Industry: MTOR exceeded the US Machinery industry which returned 22.4% over the past year.

Return vs Market: MTOR exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

MTORIndustryMarket
7 Day-1.8%1.1%1.2%
30 Day7.0%1.0%3.5%
90 Day11.5%8.6%11.7%
1 Year25.3%25.3%21.4%19.2%26.9%24.2%
3 Year82.8%82.8%46.1%36.7%53.0%43.2%
5 Year68.2%68.2%77.0%55.6%75.3%56.0%

Price Volatility Vs. Market

How volatile is Meritor's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Meritor undervalued compared to its fair value and its price relative to the market?

16.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MTOR ($25.51) is trading below our estimate of fair value ($30.09)

Significantly Below Fair Value: MTOR is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: MTOR is good value based on its PE Ratio (7.3x) compared to the Machinery industry average (23.4x).

PE vs Market: MTOR is good value based on its PE Ratio (7.3x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: MTOR's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: MTOR is overvalued based on its PB Ratio (5.4x) compared to the US Machinery industry average (2.5x).


Next Steps

Future Growth

How is Meritor forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

-6.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MTOR's earnings are forecast to decline over the next 3 years (-6.2% per year).

Earnings vs Market: MTOR's earnings are forecast to decline over the next 3 years (-6.2% per year).

High Growth Earnings: MTOR's earnings are forecast to decline over the next 3 years.

Revenue vs Market: MTOR's revenue is expected to decline over the next 3 years (-3.7% per year).

High Growth Revenue: MTOR's revenue is forecast to decline over the next 3 years (-3.7% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MTOR's Return on Equity is forecast to be very high in 3 years time (60.5%).


Next Steps

Past Performance

How has Meritor performed over the past 5 years?

5.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MTOR has high quality earnings.

Growing Profit Margin: MTOR's current net profit margins (6.6%) are higher than last year (2.9%).


Past Earnings Growth Analysis

Earnings Trend: MTOR's earnings have grown by 5.5% per year over the past 5 years.

Accelerating Growth: MTOR's earnings growth over the past year (141.7%) exceeds its 5-year average (5.5% per year).

Earnings vs Industry: MTOR earnings growth over the past year (141.7%) exceeded the Machinery industry 9.6%.


Return on Equity

High ROE: Whilst MTOR's Return on Equity (71.08%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Meritor's financial position?


Financial Position Analysis

Short Term Liabilities: MTOR's short term assets ($1.2B) exceed its short term liabilities ($936.0M).

Long Term Liabilities: MTOR's short term assets ($1.2B) do not cover its long term liabilities ($1.5B).


Debt to Equity History and Analysis

Debt Level: MTOR's debt to equity ratio (225.5%) is considered high.

Reducing Debt: MTOR had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: MTOR's debt is well covered by operating cash flow (27.4%).

Interest Coverage: MTOR's interest payments on its debt are well covered by EBIT (6.9x coverage).


Balance Sheet

Inventory Level: MTOR has a high level of physical assets or inventory.

Debt Coverage by Assets: MTOR's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

What is Meritor's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%1.4%markettop25%3.7%industryaverage1.9%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate MTOR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate MTOR's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if MTOR's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if MTOR's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: MTOR is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of MTOR's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Meritor's salary, the management and board of directors tenure and is there insider trading?

4.1yrs

Average management tenure


CEO

Jay Craig (59yo)

4.8yrs

Tenure

US$7,399,117

Compensation

Mr. Jeffrey A. Craig, also known as Jay, has been the Chief Executive Officer of Meritor, Inc. (Formerly known as ArvinMeritor, Inc.) since April 29, 2015 and has been its President since June 9, 2014. Mr. ...


CEO Compensation Analysis

Compensation vs Market: Jay's total compensation ($USD7.40M) is above average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Jay's compensation has been consistent with company performance over the past year.


Management Age and Tenure

4.1yrs

Average Tenure

54yo

Average Age

Experienced Management: MTOR's management team is considered experienced (4.8 years average tenure).


Board Age and Tenure

4.9yrs

Average Tenure

65yo

Average Age

Experienced Board: MTOR's board of directors are considered experienced (4.9 years average tenure).


Insider Trading

Insider Buying: MTOR insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$352,11506 Dec 19
Chrishan Anthon Villavarayan
EntityIndividual
Role
Chief Operating Officer
Executive VP & COO
Shares15,000
Max PriceUS$23.47
SellUS$330,74219 Nov 19
Chrishan Anthon Villavarayan
EntityIndividual
Role
Chief Operating Officer
Executive VP & COO
Shares13,500
Max PriceUS$24.50
BuyUS$42,00016 May 19
Rodger Boehm
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$21.00
SellUS$812,68021 Feb 19
Timothy Heffron
EntityIndividual
Role
Chief Information Officer
Senior VP of HR & Chief Information Officer
Shares36,940
Max PriceUS$22.00
SellUS$729,95019 Feb 19
Chrishan Anthon Villavarayan
EntityIndividual
Role
Chief Operating Officer
Executive VP & COO
Shares34,246
Max PriceUS$21.31
SellUS$206,25607 Feb 19
Joseph Plomin
EntityIndividual
Role
Senior Key Executive
Senior VP and President of Aftermarket & Industrial & Trailer
Shares10,000
Max PriceUS$20.63

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Joe Plomin (57yo)

    Senior VP and President of Aftermarket & Industrial & Trailer

    • Tenure: 6yrs
    • Compensation: US$1.98m
  • Jay Craig (59yo)

    President

    • Tenure: 4.8yrs
    • Compensation: US$7.40m
  • Carl Anderson (50yo)

    Senior VP & CFO

    • Tenure: 0.8yrs
    • Compensation: US$1.79m
  • Krista Sohm

    VP and Chief Marketing & Communications Officer

    • Tenure: 4yrs
  • Chris Villavarayan (49yo)

    Executive VP & COO

    • Compensation: US$2.50m
  • Steve Beringhause (53yo)

    CTO & Director

    • Tenure: 0.08yrs
  • Tim Heffron (55yo)

    Senior VP of HR & Chief Information Officer

    • Tenure: 8.5yrs
    • Compensation: US$1.66m
  • Paul Bialy

    VP & Chief Accounting Officer

    • Tenure: 4.1yrs
  • Todd Chirillo

    Senior Director of Investor Relations

    • Scott Confer

      Interim Chief Legal Officer & Corporate Secretary


      Board Members

      • William Newlin (79yo)

        Independent Non-Executive Chairman

        • Tenure: 3.8yrs
        • Compensation: US$374.99k
      • Lloyd Trotter (73yo)

        Independent Director

        • Tenure: 5yrs
        • Compensation: US$239.96k
      • Rhonda Brooks (66yo)

        Independent Director

        • Tenure: 19.5yrs
        • Compensation: US$234.99k
      • Ike Evans (76yo)

        Independent Director

        • Tenure: 14.7yrs
        • Compensation: US$224.99k
      • William Lyons (71yo)

        Independent Director

        • Tenure: 6.7yrs
        • Compensation: US$249.98k
      • Jan Bertsch (62yo)

        Independent Director

        • Tenure: 3.3yrs
        • Compensation: US$234.94k
      • Tom Pajonas (64yo)

        Independent Director

        • Tenure: 6.3yrs
        • Compensation: US$244.99k
      • Jay Craig (59yo)

        President

        • Tenure: 4.8yrs
        • Compensation: US$7.40m
      • Steve Beringhause (53yo)

        CTO & Director

        • Tenure: 0.08yrs
      • Rodger Boehm (60yo)

        Independent Director

        • Tenure: 2.1yrs
        • Compensation: US$234.95k

      Company Information

      Meritor, Inc.'s company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Meritor, Inc.
      • Ticker: MTOR
      • Exchange: NYSE
      • Founded: 1909
      • Industry: Construction Machinery and Heavy Trucks
      • Sector: Capital Goods
      • Market Cap: US$1.958b
      • Shares outstanding: 78.13m
      • Website: https://www.meritor.com

      Number of Employees


      Location

      • Meritor, Inc.
      • 2135 West Maple Road
      • Troy
      • Michigan
      • 48084
      • United States

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      MTORNYSE (New York Stock Exchange)YesCommon StockUSUSDSep 1997
      AID1DB (Deutsche Boerse AG)YesCommon StockDEEURSep 1997

      Biography

      Meritor, Inc. designs, develops, manufactures, markets, distributes, sells, services, and supports integrated systems, modules, and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation, and industrial sectors. It operates through two segments, Commercial Truck; and Aftermarket, Industrial and Trailer. The Commercial Truck segment supplies drivetrain systems and components, including axles, drivelines, and braking and suspension systems primarily for medium-and heavy-duty trucks and other applications. The Aftermarket, Industrial and Trailer segment supplies axles, brakes, drivelines, suspension parts, and other replacement parts to commercial vehicle and industrial aftermarket customers. It also supplies drivetrain systems and various components, such as axles, drivelines, brakes, and suspension systems for military, construction, bus and coach, fire and emergency, and other applications; and various undercarriage products and systems for trailer applications. The company also sells third-party and private label items, which include brake shoes and friction materials; automatic slack adjusters; yokes and shafts; wheel-end hubs and drums; ABS and stability control systems; shock absorbers and air springs; and air brakes. Meritor, Inc. sells its products under the Meritor, Euclid, Trucktechnic, US Gear, AxleTech, and Mach brands primarily to OEMs, their parts marketing operations, and their dealers, as well as other independent distributors and service garages in the aftermarket industry in North America, South America, Europe, and the Asia Pacific. The company was formerly known as ArvinMeritor, Inc. and changed its name to Meritor, Inc. in March 2011. Meritor, Inc. was founded in 1909 and is headquartered in Troy, Michigan. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/20 23:32
      End of Day Share Price2020/01/17 00:00
      Earnings2019/09/30
      Annual Earnings2019/09/30


      Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.