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Autos' Increased Sensor Content Drives Sensata's Growth

The firm is positioned to benefit from stricter emissions, vehicle safety, and fuel efficiency standards.

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 Sensata Technologies (ST) is a leader in mission-critical sensors and electrical protection and is engaged largely in the development, manufacture, and sale of automotive-related sensors and controls. We think the firm is positioned well to benefit from increased automotive sensor content as stricter emissions, vehicle safety, and fuel efficiency standards are forcing automakers to use more sensors. We believe Sensata’s near-leading share in its major end markets is sustainable, thanks largely to switching costs faced by its customers.

In the near term, we believe Sensata’s top-line growth will be largely derived from increased automotive sensor content on the back of low-single-digit global automotive production growth. Continuous technological developments, modestly increasing vehicle production, and customer preferences for additional safety and comfort features have contributed to the increase in sensor demand.

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Timothy Feeney does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.