Aptiv PLC’s APTV robust tech-savvy initiatives are boosting its performance. Shareholder-friendly initiatives are also encouraging. Meanwhile, geopolitical uncertainties are adversely impacting the company’s performance.

The Zacks Consensus Estimate for APTV’s 2025 earnings is pegged at $6.2 per share, suggesting 13.4% growth from the year-ago reported level. For 2026, the bottom line is pegged at $8.05 per share, hinting at a 13.4% year-over-year increase. The company has an expected long-term (three to five years) EPS growth rate of 14.9%.

Factors That Auger Well for APTV’s Success

Aptiv's planned tax-free spin-off of its Electrical Distribution Systems business into a new, independent, publicly traded company, announced on Jan. 22, 2025, reflects a strategic move to create two highly focused entities. This decision is aimed at unlocking greater value for customers, shareholders and employees by allowing each business to concentrate on its core strengths.

Moreover, Aptiv is realigning into three operating segments — Electrical Distribution Systems, Engineered Components Group, and Advanced Safety and User Experience — to streamline operations and drive growth. The spin-off is expected to be completed by March 31, 2026.

APTV is benefiting from the growing demand for improved engine management and lower power consumption in the automotive industry. Its "smart architecture" provides a competitive edge by reducing wiring requirements, making vehicles more fuel-efficient while enabling the addition of multiple features. This aligns with key industry trends focused on decreasing environmental impacts and increasing fuel economy, helping the company capture a larger market share.

AI-powered personalization is at the core of APTV's tech-savvy strategies, which are bolstering the company's prospects. At CES 2025, Aptiv will showcase software-defined vehicles (SDVs) featuring advanced technologies like the scalable Gen 6 ADAS platform, hands-off urban assist and ML-based predictive technology. The company will also highlight 360-degree sensing and adaptable electrification solutions for EVs and autonomous vehicles. These innovations underscore APTV’s leadership in shaping the future of mobility, enhancing vehicle performance, user experience and market competitiveness.

APTV’s current ratio (a measure of liquidity) was at 1.53 at the end of the fourth quarter of 2024, lower than the industry’s 2.06. However, the metric has improved marginally from the preceding quarter due to a rise in accounts receivable and inventory. Furthermore, a current ratio exceeding 1 portrays strength in the company’s ability to cover short-term debt.

Aptiv’s shareholder-friendly initiatives are also commendable. In January 2019, the board of directors approved a share repurchase program authorizing the buyback of up to $2.0 billion in ordinary shares. This program commenced in February 2023, following the completion of the company’s $1.5 billion share repurchase program in April 2016. In 2023, APTV repurchased shares worth $398 million, and in 2024, the company repurchased approximately 44.4 million shares for a total of around $3.35 billion.

Owing to such tailwinds, APTV shares have surged 12.5% over the past 90 days compared with the industry’s decline of 2.2% in the same period.

Image Source: Zacks Investment Research

APTV: Key Risks to Watch

Aptiv is mired in several headwinds, adversely impacting its performance. Lower fourth-quarter volumes led to a 2% revenue decline despite 5% growth in non-auto end markets. For the full year, revenue growth was down 3%, with weakness in North America and Europe, partially offset by 16% growth with local China OEMs. Moreover, revenues from low-voltage and high-voltage electrified platforms dropped by 16%.

Geopolitical uncertainty, particularly around tariffs and potential trade policy changes, has introduced caution in the company’s outlook, particularly regarding North American production. A 3% decline in global vehicle production is expected, with North American production forecasted to fall by 5% despite content growth with key customers. European production is also expected to decline as major OEMs transition from internal combustion engines to electrified vehicle platforms.

APTV’s Zacks Rank & Stocks to Consider

Aptiv has a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the broader Zacks Business Services sector are Maximus MMS and Booz Allen Hamilton BAH.

Maximus currently sports a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

MMS has an encouraging earnings surprise history, having outpaced the Zacks Consensus estimate in three of the trailing four quarters and missed once. The average beat was 13.3%.

Booz Allen Hamilton currently carries a Zacks Rank #2 (Buy).

BAH has an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The average beat was 6.7%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report

Maximus, Inc. (MMS) : Free Stock Analysis Report

Aptiv PLC (APTV) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research