Can TRW Automotive Escape the Michigan Mess?
One such smaller player is TRW Automotive (NYSE:TRW), which makes auto parts and auto safety components. TRW’s earnings have grown steadily in the second half of 2007 and first half of 2008 (to $127M in second quarter 2008) on the strength of its international sales – which were 58% of the company’s 2007 revenues. Its stock price, however, has not followed suit – instead, it has sunk with the rest of its industry as investors continue to fear that the trouble has just begun for companies that make cars and associated parts. But a closer look at this stock indicates that the market may be missing something when it lumps TRW in with its Michigan cohorts. First, there are the international revenue numbers – just 30% of revenues in 2007 came from the depressed North American market. Another important consideration is the company’s focus on auto safety equipment like airbags and seatbelts. Safety equipment was 32% of TRW’s revenue in ‘07, but 56% of the company’s pre-tax earnings as the pro
