Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Federal-Mogul Has Work To Do On Margins

There were some solid positives in Federal-Mogul's (NASDAQ:FDML) first quarter, as the company's Powertrain business handily outgrew the light vehicle markets in North America and Europe and the company successfully refinanced some large outstanding debt balances. There's more work to do on margins, though, and the company is facing increasingly difficult comps, higher interest expense, and integration expenses from three recent acquisitions. Federal-Mogul still looks undervalued today, but that's not exactly a consensus opinion and the company's high debt level increases the overall risk.

Q1 Comes Up Short

Federal-Mogul reported revenue growth of 7% for the first quarter, with the total result coming in about 2% below expectations. The company's Powertrain business was stronger than expected, growing...

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