Sensata Technologies’ second quarter results were met with a negative market reaction, despite revenue and non-GAAP earnings per share coming in above Wall Street expectations. Management pointed to operational improvements, such as a sharp rise in free cash flow conversion and successful mitigation of tariff costs, as key drivers of the quarter. CEO Stephan Von Schuckmann highlighted the company’s focus on operational excellence and working capital optimization, noting, “Our cash conversion rate in the second quarter was 91%, a significant step-up from our first quarter.” The team also cited progress in new product launches in the Sensing Solutions segment and resilience in key end markets. However, end-market volatility, particularly in heavy vehicle and off-road (HVOR) markets, continued to weigh on overall performance.
Is now the time to buy ST? Find out in our full research report (it’s free).
Sensata Technologies (ST) Q2 CY2025 Highlights:
- Revenue: $943.4 million vs analyst estimates of $933.6 million (8.9% year-on-year decline, 1.1% beat)
- Adjusted EPS: $0.87 vs analyst estimates of $0.84 (4% beat)
- Adjusted EBITDA: $212.1 million vs analyst estimates of $214.1 million (22.5% margin, 0.9% miss)
- Revenue Guidance for Q3 CY2025 is $915 million at the midpoint, roughly in line with what analysts were expecting
- Adjusted EPS guidance for Q3 CY2025 is $0.84 at the midpoint, above analyst estimates of $0.83
- Operating Margin: 14.6%, up from 12.5% in the same quarter last year
- Inventory Days Outstanding: 88, down from 94 in the previous quarter
- Market Capitalization: $4.29 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Sensata Technologies’s Q2 Earnings Call
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Mark Trevor Delaney (Goldman Sachs): Asked about drivers of margin improvement and the path to 20%+ EBIT margins. CEO Stephan Von Schuckmann attributed progress to operational productivity initiatives and benchmarking, while CFO Andrew Lynch emphasized a near-term focus on margin resilience rather than long-term targets.
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Joseph Craig Giordano (TD Cowen): Queried about the need for further SKU reduction and portfolio rationalization. CEO Von Schuckmann confirmed that most rationalization is complete but described it as an ongoing process, with continuous monitoring and adjustments.
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Shreyas Patil (Wolfe Research): Sought clarity on the competitive landscape in China and content per vehicle opportunity. CEO Von Schuckmann explained that technical differentiation and cost focus are crucial to gaining share among local OEMs, who are increasingly expanding internationally.
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Joseph Robert Spak (UBS): Focused on free cash flow conversion and capital expenditure trends. CFO Lynch reaffirmed the 80% cash conversion target as a floor and noted flexibility in capital spending depending on market conditions.
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Robert Gregor Jamieson (Vertical Research): Asked about changes implemented within the global sales team to better target key regions and customers. CEO Von Schuckmann described a more selective approach, focusing on the most promising OEMs and balancing risk between electrification and combustion applications.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be watching (1) the pace and revenue conversion of new business wins in China, especially with NEV OEMs, (2) the continued scale-up of gas leak detection within Sensing Solutions and its expansion into new geographies, and (3) the company’s ability to sustain margin improvements and high cash conversion rates despite cyclical headwinds. Execution on ongoing cost efficiency initiatives and further portfolio optimization will also be key signposts.
Sensata Technologies currently trades at $29.45, down from $32.53 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free).
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