Adient plc (ADNT) began trading Oct. 31, 2016, when Johnson Controls (JCI) spun off its automotive experience segment into this new company. The company is the leading seating supplier to the industry with about one third of the global market.
It benefits from a diverse customer base and a strong international presence. ADNT has been seeing strong revenue, driven by recovering industry volume and a healthy backlog. It has also seen new business wins from auto companies such as Honda (HMC), Toyota (TM), and Nissan (NSANY), which should help drive revenue growth.
ADNT has a current ratio of 1.1 which indicates it has more than enough liquidity to handle short-term obligations. The company has also shown strong growth as earnings have grown an average of 107.9% per year over the past three years. Analysts forecast earnings to rise 5,625% this year, leading to a Growth Grade of B in our POWR Ratings system.
The stock also looks undervalued with a forward P/E of 7.92. ADNT had been trending down from early June to mid-July, but performance has been mixed since, as shown in the chart below.
Take a look at the 1-year chart of ADNT below with my added notations:
ADNT has formed key support at around $35 (green) over the past several weeks. In addition, the stock is also declining against a potential down trending resistance line (red). These two lines have ADNT trading within a common pattern known as a descending triangle.
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Eventually, the stock will break out of this triangle pattern. A short trade could be made on a break of support. A long trade could be made on a break through the triangle resistance.
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ADNT shares were trading at $41.61 per share on Monday morning, up $0.89 (+2.19%). Year-to-date, ADNT has gained 19.67%, versus a 19.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing. More...
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