September 7, 2018

MTOR – Market expectations are for Uniform ROA to further compress from current muted levels, but management is confident in their performance, proactivity, and new contract


  • Meritor, Inc. (MTOR:USA)¬†currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 10.0x Uniform P/E. At these levels, market expectations are for declining Uniform ROA however, management is confident in their ability to sustain escalating revenue in their key inventory banks, and in their new contract with BMC
  • Specifically, management is confident that their proactivity in building inventory banks in critical component areas allows them to be the best in their industry. Additionally, they are confident in their ability to sustain revenue outperformance in end markets across the globe and to maintain strong operating income growth levels. Also, they are confident that steel price headwinds will amount to just $4mn in Q4, and in their new program to supply BMC with hub-reduction axles
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