Aptiv Is Breaking Up—and Investors Should Buy the Stock

Aptiv’s cutting-edge Radar AI/ML and ML Behavior Planner technologies. (Courtesy Aptiv)

Shares have sunk because it is perceived as an auto-parts supplier, but the planned Aptiv spinoffs have growth potential.

APTV

Aptiv PLC

1-Year Price Chart

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$79.88

as of market close August 26, 2025

Market Cap

$17.4 B

NTM P/E

10.5

Div Yield

0%

Beta

0.92

52 Week Range

$47.19

$79.88

• Auto parts supplier Aptiv is splitting up into two companies, one selling safety and software solutions, the other supplying electrical distribution systems.
• Breaking up will allow both companies to better allocate capital to growth opportunities. It also could unlock shareholder value as investors assign higher multiples to non-automotive industrial businesses that demonstrate growth and margin improvement.
• The company’s recent performance has been strong, with a feared slowdown in automotive production not materializing. That has Wall Street analysts increasing 2025 and 2026 earnings estimates.

If you break it up, they will come. That’s the bet auto-parts supplier Aptiv is making—and investors should consider going along for the ride.

Aptiv hasn’t had an easy time of it in recent years. The company began life as Delphi Automotive, the auto parts business that was spun out of General Motors in 1999, before declaring bankruptcy in 2005, crushed by a combination of high labor costs, high debt, and an underfunded pension. After a restructuring, Delphi spun off Aptiv in 2017, with the former keeping the powertrain technologies such as fuel injectors, valve actuators, and sensors, and the latter taking the higher-growth businesses such as vehicle electrification and safety.

Aptiv was a great stock through 2021, benefiting from investor excitement for electric vehicles. But when the EV boom went bust, so did Aptiv’s stock—it dropped 55% from a late 2021 peak of almost $180 to a recent $79.88.

The problem isn’t earnings. Aptiv is expected to earn $7.48 this year, according to FactSet, up from $2.61 in 2021, a compound annual growth rate of 30%.

Instead, the problem is one of perception. At its peak, shares of Aptiv fetched about 36 times forward earnings, but once investors decided it was just an auto-part supplier again, its valuation slumped to 10 times. To change the perception problem, Aptiv plans to split into two companies, one that will focus on its slower-growing electrical-distribution-systems business, the other on faster-growing safety and software. If all goes well, the spin, which is scheduled to wrap up during the first quarter of 2026, should allow both parts of the company to succeed—and investors to profit.

“Aptiv’s bold spinoff isn’t just a corporate shuffle, it’s a strategic shift,” says spinoff specialist and Edge Research founder Jim Osman.

It isn’t hard to see why management is pursuing a breakup: While the EDS business had annual sales in 2024 of $8.3 billion, with earnings before interest, taxes, depreciation, and amortization, or Ebitda, profit margins of 9.5%, safety & software had sales of $12.2 billion with Ebitda margins of 18.8%—and the potential to reach customers outside the auto business. “The [Delphi] spin was about making Aptiv a better automotive supplier,” writes Baird analyst Luke Junk. “This is more orienting the company towards higher return opportunities overall.”

The new Aptiv, or RemainCo in Wall Street jargon, will sell sensors, software, and electronics that enable higher levels of autonomous functions and electronic communication for cars, planes, and other machines. It is also looking to expand beyond autos with strategic acquisitions—a transformation that has already begun. Aptiv bought communications software provider Wind River in 2022.

If all goes well, it will begin to look more like industrial companies such as TE Connectivity and Amphenol, which fetch 16 times earnings and 22 times estimated 2025 earnings before interest, taxes, depreciation, and amortization, or Ebitda, respectively. Aptiv isn’t either of those companies, of course. TE and Amphenol benefit from high growth in AI data center spending. Post-spin, about 25% of Aptiv’s business will be nonautomotive, estimates Junk. The numbers for TE and Amphenol are about 55% and 80%, respectively. But Aptiv could trade like Sensata, a maker of sensors and electrical components for the car, aerospace, construction, and manufacturing industries. It trades for about nine times estimated Ebitda, one and a half points above Aptiv’s 7.5. Sensata gets 45% of its business from nonautomotive companies.

There’s room for improvement in the EDS business as well. For starters, the outlook for automotive suppliers is better than feared, says RBC Capital Markets analyst Tom Narayan, with a tariff-induced slowdown not visible in the numbers. That means stronger production from auto makers and more parts for auto suppliers. The independent EDS business should be able to boost margins from high single digits to low double digits using a combination of automation and changes to its manufacturing base. Finally, there is consolidation. EDS will “have buyers,” adds Narayan, with other suppliers looking for ways to grow while lowering costs. He has an Outperform rating and $92 price target on Aptiv stock, up 15% from recent levels.

But there’s reason to be more optimistic. Getting an automotive-like multiple on the electric business and a Sensata-like valuation on the RemainCo, means Aptiv shares could hit $100, up about 25% from recent levels. The biggest risk is that investors continue to view both spinoffs as car companies, which would cause the stock to fall back towards $70, or about 15% from Tuesday’s close.

But a well-managed spin has the potential to create value—especially where none was seen. Fuel systems provider PHINIA was supposed to face challenges after its 2023 spin from BorgWarner amid the transition to battery-powered personal transportation, says Osman. Shares have roughly doubled over the past two years, while BorgWarner stock has gained about 30%. When General Electric split up in 2024, GE Aerospace was supposed to be the hotter stock, and while it’s doubled since the spin, shares of GE Vernova , which were thought to have a tougher road, quadrupled.

Ultimately, the success or failure of the spin will depend on management’s execution and the fickleness of the markets. But with Aptiv’s history, we like our chances.

The Technical View

Aptiv stock’s rally started during the week ended May 6, when shares jumped 10%, breaking a series of lower highs dating back to the fourth quarter of 2024. Aptiv has shown excellent follow through after bouncing off a double bottom and breaking through resistance at $72.53. Now, the 50-week moving average is starting to slope higher, suggesting that this turnaround is real. There’s a good chance the stock will hit $100 by the end of the year. If the stock breaks below $69, consider selling. — Doug Busch

Write to Al Root at allen.root@dowjones.com