The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true v ...

Investors interested in stocks from the Automotive - Original Equipment sector have probably already heard of Strattec Security (STRT) and Atmus Filtration Technologies (ATMU) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision t ...

Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying those that can fulfill their potential is challenging [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score system aids in identifying promising growth stocks by analyzing real growth prospects beyond traditional metrics [2] - Strattec Security (STRT) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is crucial for investors, with double-digit growth being particularly desirable as it indicates strong future prospects [3] - Strattec Security has a historical EPS growth rate of 20%, with projected EPS growth of 16.2% this year, surpassing the industry average of 15.6% [4] Group 3: Cash Flow Growth - High cash flow growth is essential for growth-oriented companies, allowing them to fund new projects without relying on external financing [5] - Strattec Security's year-over-year cash flow growth is 11.7%, significantly higher than the industry average of -4.3% [5] - The company's annualized cash flow growth rate over the past 3-5 years is 18.2%, compared to the industry average of 2.9% [6] Group 4: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements, making them an important consideration for investors [7] - Strattec Security has seen a 19.3% increase in current-year earnings estimates over the past month [7] Group 5: Overall Assessment - Strattec Security has achieved a Growth Score of A and a Zacks Rank 1 due to positive earnings estimate revisions, indicating it is a strong candidate for growth investors [9]

Core Viewpoint - The article emphasizes the importance of confirming the sustainability of stock trends for profitable short-term investing, highlighting the use of a specific screening strategy to identify stocks with strong fundamentals and positive price momentum. Group 1: Trend Analysis - The trend in short-term investing is crucial, and confirming its sustainability is essential for profitability [1][2] - A predefined screening strategy, "Recent Price Strength," helps identify stocks with sufficient fundamental strength to maintain their upward trend [3] Group 2: Stock Example - Strattec Security (STRT) - Strattec Security (STRT) has shown a solid price increase of 29.7% over the past 12 weeks, indicating strong investor interest [4] - STRT has maintained a price increase of 5% over the last four weeks, suggesting the trend is still intact [5] - The stock is currently trading at 89.3% of its 52-week high-low range, indicating a potential breakout [5] Group 3: Fundamental Strength - STRT holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises [6] - The Zacks Rank system has a strong historical performance, with Rank 1 stocks averaging a +25% annual return since 1988 [7] - STRT also has an Average Broker Recommendation of 1 (Strong Buy), reflecting high optimism from the brokerage community regarding its near-term price performance [7] Group 4: Additional Opportunities - Besides STRT, there are other stocks that meet the criteria of the "Recent Price Strength" screen, suggesting further investment opportunities [8] - The article encourages exploring over 45 Zacks Premium Screens tailored to different investing styles for potential winning stock picks [8]

Core Viewpoint - Phinia (PHIN) is currently outperforming its peers in the Auto-Tires-Trucks sector, with a year-to-date return of 18.4% compared to the sector's average return of -2.2% [4]. Company Performance - Phinia is one of 103 companies in the Auto-Tires-Trucks group, which ranks 12 within the Zacks Sector Rank [2]. - The Zacks Rank for Phinia is 1 (Strong Buy), indicating a strong earnings outlook [3]. - Over the past three months, the Zacks Consensus Estimate for Phinia's full-year earnings has increased by 12.5%, reflecting improved analyst sentiment [4]. Industry Context - Phinia belongs to the Automotive - Original Equipment industry, which includes 54 stocks and currently ranks 148 in the Zacks Industry Rank [6]. - The average return for the Automotive - Original Equipment industry so far this year is 4.1%, indicating that Phinia is performing better than its industry peers [6]. Comparative Analysis - Another stock in the Auto-Tires-Trucks sector, Strattec Security (STRT), has a year-to-date return of 18.3% and also holds a Zacks Rank of 1 (Strong Buy) [5]. - The consensus estimate for Strattec Security's current year EPS has increased by 3.1% over the past three months, showing positive momentum similar to Phinia [5]. Future Outlook - Investors should continue to monitor Phinia and Strattec Security as they are likely to maintain their strong performance in the Auto-Tires-Trucks sector [7].

Core Insights - Strattec Security reported a strong second quarter for fiscal 2026, with significant improvements in profitability and cash generation despite challenges in the automotive industry [4] - The company experienced a 6% increase in sales to $137.5 million, driven by pricing strategies, favorable product mix, and tariff recoveries [3][6] - Gross margin expanded by 330 basis points to 16.5%, with net income nearly quadrupling year-over-year to approximately $5.0 million, or $1.21 per diluted share [3][6] Financial Performance - Quarterly sales reached $137.5 million, with management noting disciplined pricing actions contributing approximately $3.1 million [2][6] - Gross margin improved to 16.5%, reflecting a 330 basis point increase from the previous year, while year-to-date gross margin expanded to 16.9% [3][7] - Operating cash flow for Q2 was $13.9 million, up 48% year-over-year, with total cash at $99 million and total debt reduced to $2.5 million [13][15] Cost Management and Restructuring - The company achieved $1.7 million in restructuring savings during the quarter, contributing to margin improvements [1][6] - Operating expenses increased to $17.9 million, or 13% of sales, but were partially offset by lower executive transition expenses [10] - A voluntary retirement program is expected to generate $3.4 million in annualized savings, with benefits expected to phase in over the next quarters [12] Market Outlook and Strategic Focus - Strattec anticipates a slight sequential sales improvement in Q3 but forecasts a 3%–4% decline in sales for the second half of the fiscal year [15] - The company is focusing on power access products and digital key technology, with new customer wins expected to take time due to the long automotive sales cycle [19][20] - Management addressed supply chain disruptions, indicating minimal impact on sales from recent challenges [16] Investment and Growth Initiatives - Capital expenditures for the quarter were $2.6 million, primarily for new product programs and equipment [14] - The company is evaluating mergers and acquisitions as a potential growth lever while maintaining flexibility amid market uncertainties [18]

Financial Performance - Net sales for the second quarter of fiscal 2026 reached $137.5 million, an increase of $7.6 million or 6% compared to the prior year[54] - Gross profit improved to $22.7 million with a gross margin of 16.5%, up from 13.2%, reflecting a 330 basis point increase[55] - Income from operations rose to $4.9 million, representing a 128% increase year-over-year, with an operating margin of 3.5%[53] - Year-to-date net sales totaled $289.9 million, an increase of $21.0 million or 8% compared to the previous year[61] - Year-to-date gross profit was $49.1 million, with a gross margin improvement from 13.4% to 16.9%, a 350 basis point increase[62] Expenses and Cash Flow - Selling, administrative, and engineering expenses for the second quarter were $17.9 million, representing 13.0% of sales, up from 11.6% in the prior year[56] - Cash provided by operating activities for the six months ended December 28, 2025, was $25.2 million, an increase of $4.4 million compared to the prior year[67] Balance Sheet and Working Capital - At December 28, 2025, the company had $99.0 million in cash and cash equivalents, with no borrowings outstanding under the $40.0 million credit agreement[68] - Primary working capital as a percentage of sales (PWC %) for December 28, 2025, was 18%, consistent with the beginning of the fiscal year[70] - Accounts receivable decreased by $12.9 million to $89 million, resulting in a PWC % of 16%[70] - Inventory levels increased by $7.2 million to $72 million, with a PWC % of 13%[70] - Accounts payable reduced by $6.3 million to $(60) million, maintaining a PWC % of (11%)[70] - Net primary working capital remained stable at $101 million, with a PWC % of 18% in December 2025 and 17% in June 2025[70] Interest and Tax - Interest income increased by $1.0 million due to higher cash levels, while interest expense decreased by $0.3 million due to debt repayment[64] - The effective income tax rate for the year-to-date period was 22.2%, down from 27.0% in the prior year, reflecting changes in foreign tax credits[66]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Financial Data and Key Metrics Changes - Sales increased by 6% to $137.5 million, driven by pricing, favorable sales mix, higher content value, new program launches, and tariff recovery [8][12] - Gross margin improved to 16.5%, expanding by 330 basis points year-over-year [8][14] - Net income nearly quadrupled to $5 million, or $1.21 per diluted share, with adjusted earnings per share growing 163% to $1.71 [8][21] - Cash from operations reached $14 million for the quarter, totaling $25 million year-to-date [9][23] - The company has a strong balance sheet with $99 million in cash and total debt of only $2.5 million [9][25] Business Line Data and Key Metrics Changes - The company implemented a voluntary retirement program expected to generate $3.4 million in annualized savings [10][37] - Selling, Administrative, and Engineering expenses increased to $17.9 million, or 13% of sales, due to one-time charges and investments in business transformation [18][20] Market Data and Key Metrics Changes - North American automotive production is forecasted to remain flat to moderately decline, impacting the company's sales [28] - The company expects a slight improvement in sales in the third quarter, but anticipates a year-over-year decline of approximately 3%-4% in the second half [14][56] Company Strategy and Development Direction - The company is focused on deepening customer relationships in engineered access solutions and striving for operational excellence to enable sustainable, profitable growth [29] - Investments are prioritized for organic growth, process modernization, and evaluating M&A opportunities for long-term growth [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from supply chain disruptions but noted minimal impact on sales due to customer adaptability [33] - The company is confident in its transformation efforts, having significantly expanded margins and tripled net income [28][29] Other Important Information - The company expects to generate about $40 million in cash from operations annually, with capital expenditures for fiscal 2026 projected to be less than $10 million [24][25] Q&A Session Summary Question: Were there actual revenue pushes from Q2 into Q3 due to supply chain disruptions? - Management indicated there was some slight impact from a supplier fire and chip challenges, but customers managed to work around these issues with minimal sales impact [33] Question: How should selling and administrative expenses be expected to trend in the second half? - Management expects these expenses to remain in the 10%-11% range for the back half of the year, with some adjustments for merit increases [35][36] Question: When will the $3.4 million in savings from the early retirement plan hit the bottom line? - The annual benefit will be phased in, with approximately $400,000 recognized in the current quarter and expected to reach about $800,000 per quarter by the fourth quarter [37][38] Question: What is the outlook for free cash flow? - Management noted that inventory build and restructuring costs will impact cash flow in the third quarter, but the company is intentionally building inventories to improve service delivery [39][40] Question: Can you discuss conversations with potential new customers in North America? - Management highlighted ongoing discussions focused on access products and digital keys, emphasizing the long sales cycle in the automotive industry [47][48] Question: Any updates on the product line review? - Management confirmed a focus on power access products and digital key technology, having deprioritized the switch business due to profitability concerns [55]

Financial Data and Key Metrics Changes - Sales increased by 6% to $137.5 million, driven by pricing, favorable sales mix, higher content value, new program launches, and tariff recovery [5][8] - Gross margin improved to 16.5%, expanding 330 basis points year-over-year [5][10] - Net income nearly quadrupled to $5 million, or $1.21 per diluted share, with adjusted earnings per share growing 163% to $1.71 [5][12] - Cash from operations reached $14 million for the quarter, totaling $25 million year-to-date [6][13] - The company has a strong balance sheet with $99 million in cash and total debt of only $2.5 million [6][14] Business Line Data and Key Metrics Changes - Gross margin increased by $5.6 million to $22.7 million, driven by pricing actions, higher production volumes, and restructuring savings [9][10] - Selling, Administrative, and Engineering expenses rose to $17.9 million, or 13% of sales, influenced by a one-time charge related to a voluntary retirement program [11][12] Market Data and Key Metrics Changes - North American automotive production is expected to remain flat to moderately decline, impacting the company's sales forecasts [16] - The company anticipates a year-over-year revenue decline of approximately 3%-4% in the second half of the fiscal year [9][42] Company Strategy and Development Direction - The company is focused on transforming its operations, improving profitability, and investing in employee development and innovation [5][7] - Strategic priorities include supporting organic growth, process modernization, and evaluating M&A opportunities for long-term growth [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges such as supply chain disruptions and foreign exchange pressures but expressed confidence in the company's transformation and operational improvements [5][16] - The company is optimistic about its ability to deepen customer relationships and achieve sustainable, profitable growth [16][17] Other Important Information - The company implemented a voluntary retirement program expected to generate $3.4 million in annualized savings [6][11] - Capital expenditures for the fiscal year are expected to be less than $10 million, focusing on new product programs and equipment investments [14] Q&A Session Summary Question: Impact of supply chain disruptions on revenue - Management noted slight impacts from supplier issues and chip challenges but indicated minimal overall impact on sales [19][20] Question: Outlook for selling and administrative expenses - Management expects SAE to remain in the 10%-11% range for the second half of the year, with some adjustments for merit increases [22][23] Question: Timing of savings from the early retirement plan - The $3.4 million in savings will be phased in, with about $400,000 benefit realized in the current quarter and expected to reach $800,000 per quarter by the fourth quarter [24] Question: Factors affecting free cash flow - Management confirmed intentional inventory build-up and restructuring costs will impact cash flow in the upcoming quarter [25][26] Question: Conversations with potential new customers - The company is engaging with potential customers regarding access products and digital key technology, with long sales cycles expected [33][34] Question: Product line review updates - Management deprioritized the switch business but remains focused on power access products and digital key technology [40] Question: Clarification on revenue expectations - Management clarified that revenue is expected to decline 3%-4% year-over-year in the second half [42]