TRW Automotive Holdings Corp. (NYSE:TRW)

CAPS Rating: 4 out of 5

A supplier of automotive systems, modules and components to global vehicle manufacturers and related aftermarkets. The Company conducts substantially all of its operations through its subsidiaries.


Player Avatar JakilaTheHun (99.93) Submitted: 4/14/2010 12:44:08 AM : Underperform Start Price: $31.83 TRW Score: -58.35

(1) TRW is an automotive supplier and I believe this is an industry that might be overvalued by the market in general right now
(2) TRW has exposure to China, which has seen nearly obscene growth in automobile purchases
(3) I agree with James Chanos' on China --- a massive RE bubble is in place and construction props up GDP --- without this, the Chinese economy suffers and suddenly Chinese consumers can not afford nearly as many cars
(4) TRW's profitability and cash flow numbers are relatively good, but I am not sure that they justify the $31 market price, especially when you consider that TRW has negative tangible equity
(5) Free cash flows look to be somewhere between $1.30 - $2; given the risks, I think this could justify a pricetag in the range of $15 - $30; over $30 and TRW seems aggressively valued.
(6) There are a huge amount of insider sells on TRW over the past few months

All in all, while I don't know that this stock will necessarily tank, I do believe it's a good candidate for underperformance.

Featured Broker Partners