Adient plc ADNT, one of the world’s largest automotive seating suppliers, is likely to gain from its diverse customer base and international presence, as well as frequent business wins amid higher European restructuring costs and uncertainty in the timing of year-end customer recoveries.
Let’s see why you should retain this Zacks Rank #3 (Hold) stock in your portfolio.
Strong Market Position & Frequent Business Wins Aid ADNT
Adient has been gaining customers with its broad range of products. A diverse customer base and international presence have helped the company create a strong market position. Launch execution continues to be an area of focus for Adient and a key building block to win new business. Given the customer and geographic mix, the company’s market position is likely to strengthen going forward.
Frequent business wins bode well for Adient and should drive growth. In fiscal 2024, ADNT secured new and renewal contracts totaling approximately $1 billion in annual revenues. Around 90% of these agreements are with local OEMs, with many set to launch in fiscal years 2026 and 2027.
The company is gaining momentum in EMEA with improved performance driven by restructuring benefits. It is securing key programs with European customers and developing opportunities with China-based OEMs. The focus remains on enhancing efficiency and executing plans, including phasing out lower-performing metals business and launching higher-margin programs expected to positively impact results in 2026.
Adient's push for automation and modularity is paying off in 2025. Automation is cutting labor costs while boosting quality, speed and safety. Its AI-powered welding inspection with Mindtrace aims to improve efficiency, while its partnership with PASLIN on 3D sewing automation enhances precision and reduces labor needs. These innovations differentiate Adient in supporting China OEMs expanding internationally.
Weaker Sales in China & High Restructuring Costs Ail Adient
In the fiscal second quarter, Adient’s sales in China continued to lag the broader market. The company’s revenues from China in fiscal 2025 are expected to remain stable or experience a slight decline, primarily due to an unfavorable production mix driven by rising export volumes and increased output from local OEMs. It anticipates higher European restructuring costs and some uncertainty in the timing of year-end customer recoveries. As a result, it has slashed its free cash flow outlook to $150-$170 million from the previous estimate of $180 million.
Stocks to Consider
Some better-ranked stocks in the auto space are Hesai Group HSAI and Standard Motor Products, Inc. SMP. HSAI sports a Zacks Rank #1 (Strong Buy), while SMP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for HSAI’s 2025 earnings indicates year-over-year growth of 336.36%, respectively. EPS estimates for 2026 have improved 12 cents in the past 30 days.
The Zacks Consensus Estimate for SMP’s 2025 sales and earnings implies year-over-year growth of 17.1% and 12.62%, respectively. EPS estimates for 2025 and 2026 have improved 6 cents and 2 cents, respectively, in the past 30 days.
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Standard Motor Products, Inc. (SMP): Free Stock Analysis Report Adient (ADNT): Free Stock Analysis Report Hesai Group Sponsored ADR (HSAI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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