Why Is Sensata (ST) Up 7% Since Last Earnings Report?

A month has gone by since the last earnings report for Sensata (ST). Shares have added about 7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Sensata due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Sensata Technologies Holding N.V. before we dive into how investors and analysts have reacted as of late.

Sensata's Q2 Earnings Surpass Estimates

Sensata reported second-quarter 2025 adjusted earnings per share (EPS) of 87 cents compared with 92 cents a year ago. However, the bottom line topped the Zacks Consensus Estimate by 3.6%.

Revenues for the quarter reached $943.4 million, down 8.9% from a year ago. The top-line contraction was attributable to earlier announced divestitures and product lifecycle optimization efforts. However, the figure outperformed management’s expectations ($910-$940 million) and beat the consensus estimate by 1.1%. Strength in Sensing Solutions cushioned the top-line performance.

Segmental Results

Performance Sensing revenues (69.1% of total revenues) decreased 9.9% year over year to $652.2 million. The top line was affected by divested products and reduced on-road truck production in North America and Europe.

Segmental adjusted operating income was $146.9 million compared with $161.4 million in the prior-year quarter.

Sensing Solutions’ revenues (30.9%) were $291.2 million, up 8.6% year over year. This was the second consecutive quarter of year-over-year growth, fueled by new content additions in its industrials segment and market outperformance in aerospace.

Segmental adjusted operating income was $88 million compared with $79.7 million in the prior-year quarter.

Other Details

Adjusted operating income was $179.1 million compared with $196.7 million in the year-ago quarter. Adjusted operating margin expanded 20 basis points to 19%.

Adjusted EBITDA totaled $212.1 million in the quarter, declining from $231.7 million in the previous-year quarter.

Total operating expenses were $805.3 million, down 11.1% year over year.

Cash Flow & Liquidity

In the quarter under discussion, Sensata generated $140.9 million of net cash from operating activities compared with $143.5 million in the prior-year quarter. Free cash flow was $115.5 million compared with $98.4 million a year ago.

As of June 30, 2025, the company had $661.8 million in cash and cash equivalents and $3,178.5 million of net long-term debt compared with $588.1 million and $3,177.3 million, respectively, as of March 31, 2025.

In the second quarter of 2025, Sensata returned approximately $37.7 million to shareholders, comprising $20.1 million in share repurchases and $17.6 million in quarterly dividends.

Q3 Outlook

For the third quarter, the company projects revenues in the band of $900-$930 million, indicating a decrease of 5% to 1%, sequentially. This includes approximately $15 million related to tariff-related costs corresponding to pass-through revenues.

Adjusted operating income is expected to be $171-$179 million, implying a decline of 5% to no change, sequentially.

On a sequential basis, adjusted EPS is estimated to be 81-87 cents, suggesting no change to a decrease of 7%. Adjusted net income is anticipated in the $119-$127 million range, indicating stable performance to a decline of 7%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Sensata has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Sensata has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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

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