Here's Why You Should Retain Aptiv Stock in Your Portfolio Now

Aptiv PLC’s APTV performance is being driven by strong, tech-driven initiatives, while shareholder-friendly strategies are also providing positive momentum. However, geopolitical uncertainties are having a negative impact on its overall performance.

The company’s earnings for fiscal 2025 and 2026 are expected to improve 15.3% and 11.5%, respectively, year over year. Revenues are expected to decrease 0.13% in fiscal 2025 and increase 5.04% in fiscal 2026. The company has an expected long-term (three to five years) EPS growth rate of 13.3%.

Factors That Augur Well for APTV’s Success

APTV's partnership with ServiceNow, a leading AI platform that enhances business transformation by seamlessly connecting people, processes, data and devices to boost productivity, aims to drive intelligent automation and operational resilience across the telco, automotive and industrial sectors. By combining Aptiv’s edge intelligence with ServiceNow’s AI-powered workflows, the collaboration will streamline operations, enable real-time decisions and enhance agility. Aptiv will also adopt ServiceNow internally to support more than 450 AI-driven workflows, accelerating its own digital transformation.

Aptiv’s recognition by Ethisphere as one of the World’s Most Ethical Companies for the 13th consecutive year is a strong endorsement of its consistent commitment to integrity, ethics and responsible business practices. In a tech-driven landscape where trust and transparency are critical, this achievement highlights Aptiv’s leadership not only in innovation but also in corporate governance. It’s a reflection of the company’s culture and its dedication to doing business the right way while advancing next-gen, AI-powered solutions that shape the future of mobility and connectivity.

Aptiv's announcement on Jan. 22, 2025 of a planned tax-free spin-off of its Electrical Distribution Systems business into a new, independent, publicly traded company marks a strategic step toward creating two more focused and agile organizations.This strategic move is designed to create two focused entities, enabling each to sharpen its core capabilities and deliver greater value to customers, shareholders and employees. In line with this, Aptiv is restructuring into three operating segments, namely Electrical Distribution Systems, Engineered Components Group, and Advanced Safety and User Experience, to enhance operational efficiency and support future growth. The spin-off is targeted for completion by March 31, 2026.

APTV’s current ratio (a measure of liquidity) was at 1.61 at the end of the first quarter of 2025. However, the metric has improved 5.2% 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 risen 14.7% year to date compared to the industry’s decline of 2.5% in the same period.

APTV: Key Risks to Watch

Aptiv is mired in several headwinds, adversely impacting its performance. Lower first-quarter volumes led to a 2% revenue decline. The company’s adjusted revenue growth decreased 1% year over year in the first quarter of 2025. Adjusted revenues fell 4% in Europe, 2% in North America and 3% in South America. Revenues decreased 1% when adjusted for currency exchange and commodity movements compared to a 2% drop on an AWM1 basis.

Geopolitical uncertainty, including concerns over tariffs and shifting trade policies, has led Aptiv to adopt a more cautious outlook, especially for its North American operations. Moreover, Aptiv faces intense competition from both traditional automotive suppliers and emerging tech-driven players in the electrification, software-defined and connected vehicle spaces. As the industry rapidly shifts toward electrification and advanced safety solutions, competitors are aggressively investing in similar technological advancements, which could pressure Aptiv’s market share.

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 AppLovin APP and Charles River Associates CRAI.

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

APP has an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. The average beat was 23%.

Charles River Associates currently carries a Zacks Rank #2 (Buy).

CRAI has an encouraging earnings surprise history, having outpaced the Zacks Consensus Estimate in each of the trailing four quarters. The average beat was 19.4%.

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

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