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Auto Stock Roundup: AN, AXL Top Earnings, TM, TSLA, F in Focus

Zacks

Last week saw quite a few auto companies reporting results for the quarter ending on Sep 30, 2017. Two U.S auto companies which reported quarterly financial numbers last week are AutoNation Inc. AN and American Axle & Manufacturing Holdings Inc. AXL. Both the companies registered better-than-expected earnings. Japanese auto giant Toyota Motor Corporation’s TM operating income increased 10% year over year to ¥522 billion ($4.7 billion) in second-quarter fiscal 2018 (ended Sep 30, 2017).

Tesla, Inc. TSLA has agreed to buy automated equipment designer and manufacturer, Perbix Machine Co Inc. This will bolster Tesla’s efforts to turn the factory itself into a product with the aim of building up machine that makes machine.

Ford Motor Company F is continuing with its expansion efforts. The company is planning to invest $211 million in its South African assembly plant

(Read the previous roundup here: Auto Stock Roundup for Nov 2, 2017)

Recap of the Week’s Most Important Stories

1. AutoNation reported adjusted earnings of $1.08 per share in third-quarter 2017, which surpassed the Zacks Consensus Estimate of 84 cents. Earnings per share from continuing operations in third-quarter 2016 were $1.05.

Net income from continuing operations declined to $98 million from $108 million in third-quarter 2016.

During the quarter, AutoNation reported revenues of $5.43 billion, declining 2.4% year over year. Also, revenues missed the Zacks Consensus Estimate of $5.57 billion.

New vehicle revenues decreased to $3.11 billion in third-quarter 2017, from $3.20 billion in third-quarter 2016. Used vehicle revenues also declined 3.8% year over year to $1.23 billion. Parts and service business revenues came in at $841.6 million in third-quarter 2017 compared with $843.8 million in the prior-year quarter. Finance and insurance business revenues came in at $241.6 million, reflecting an increase of 5.2% (read more: AutoNation Q3 Earnings Beat Estimates, Revenues Miss)

Currently, AutoNation has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here..

2. American Axle & Manufacturing Holdings posted adjusted earnings of 86 cents per share for the third quarter, surpassing the Zacks Consensus Estimate of 64 cents. The reported figure excludes the impact of restructuring and acquisition-related costs, debt refinancing and redemption costs, plus non-recurring items, including the tax effect. In third-quarter 2016, adjusted earnings were 83 cents. The company reported net income of $86.2 million or 75 cents per share in the third quarter of 2017 compared with $62 million or 78 cents in the year-ago quarter.

Revenues increased to $1.72 billion in the reported quarter from the year-ago figure of $1.01 billion. The top line also surpassed the Zacks Consensus Estimate of $1.62 billion.

American Axle’s SG&A (Selling, General & Administrative) expenses were $102 million for the reported period compared with $78.6 million in the prior-year quarter (read more: American Axle’s Q3 Earnings & Revenues Beat Estimates).

Currently, American Axle & Manufacturing has a Zacks Rank #3 (Hold).

3. Ford announced that it will invest $211 million in its South African assembly plant, per a Reuters report. The increasing demand for Ford Ranger pickup trucks, both nationally and internationally, has prompted the auto giant to beef up its production capacity in the South African market.

Ford is expanding its production capacity in a number of emerging markets to facilitate supply and reduce costs. The latest decision to invest in South Africa affirms the automaker’s aim of grabbing local market share. The move is likely to create several direct job opportunities, along with a number of indirect jobs through its supplier base.

The company also confirmed that that the first-ever Ford Ranger Raptor will be produced in South Africa when it hits the market in 2019. As part of its strategic planning to accommodate the growing market volume, the investment entails both capacity and product capacity related matters (read more: Ford to Invest in South Africa to Meet Demand of Ranger).

Currently, Ford has a Zacks Rank #3 (Hold).

4. Tesla announced that it has agreed to buy automated equipment designer and manufacturer, Perbix Machine Co Inc, per a Reuters report. With this, Tesla is likely to further boost its efforts to turn the factory itself into a product with the aim of building up machine that makes machine.

However, the financial details of this deal have not been divulged. This announcement comes at a time when the electric car maker is aggressively focusing on raising the production of Model 3.

Importantly, for the last three years, Brooklyn Park, MN-based Perbix has been a supplier of Tesla. This acquisition by Tesla will enable it to produce more parts in house. In fact, Tesla’s strategy is to execute much of the work within the company. Tesla manufactures a range of auto parts such as seats, which most big automakers generally contract out to specialists (read more: Tesla to Acquire Automation Equipment Supplier Perbix).

Currently, Tesla has a Zacks Rank #4 (Sell).

5. Toyota’s operating income increased 10% to ¥522 billion ($4.7 billion) in second-quarter fiscal 2018 (ended Sep 30, 2017). Also, the automaker reported net income of ¥481 billion ($4.3 billion) in the quarter, up 17.1% from the year-ago period.

Consolidated revenues increased 7% year over year to ¥7.14 trillion ($64.36 billion) in the quarter. The top line surpassed the Zacks Consensus Estimate of $63.74 billion.

In the first six months of fiscal 2018, consolidated vehicle sales went up to 4,389,435 units globally, an increase of 25,898 units compared with the same period last year (read more: Toyota's Q2 Operating Income Rises Y/Y, Revenues Top).

Currently, Toyota has a Zacks Rank #3 (Hold).

Performance

Last week, the steepest increase was registered by Honda Motor Co., Ltd. HMC and the sharpest decline was witnessed by Tesla.

In the last six months, the steepest increase and the sharpest decline were witnessed by General Motors Company GM and Advance Auto Parts, Inc., respectively.

CompanyLast WeekLast 6 Months
GM-2.4%22.9%
F-2.3%8%
TSLA-5.2%-5.2%
TM2.9%18%
HMC5.6%18.2%
HOG-4.8%19%
AAP-1.7%-45.7%
AZO1.9%-15.7%


What’s Next in the Auto Space?

Earnings for the quarter ending on Sep 30, 2017 is not yet over. Watch out for the earnings releases of other auto companies over the next week.

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