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American Axle (AXL) Banks on Business Expansion, Acquisition


On Nov 13, we issued an updated research report on American Axle & Manufacturing Holdings, Inc. AXL.

On Nov 3, American Axle reported adjusted earnings per share of 86 cents for third-quarter fiscal 2017 (ended Sep 30, 2017), beating the Zacks Consensus Estimate of 64 cents. Quarterly revenues jumped 71% year over year to $1.72 billion. Also, the top line surpassed the Zacks Consensus Estimate of $1.62 billion.

For fiscal 2017, the company expects sales within the range of $6.2-$6.25 billion compared with the previous projection of approximately $6.1 billion. The raised range is also higher than $3.95 billion, recorded last year.

American Axle & Manufacturing Holdings, Inc. Price and Consensus

American Axle & Manufacturing Holdings, Inc. Price and Consensus | American Axle & Manufacturing Holdings, Inc. Quote

Adjusted earnings before income taxes, depreciation and amortization (EBITDA) are expected to be approximately $1.1 billion in 2017. American Axle reiterated its guidance for adjusted free cash to be approximately 5% of sales in 2017.

With an aim to generate incremental revenues, the company is undertaking various strategies to diversify its business and customer base, including its latest innovative driveline products and solutions. American Axle assumes that its driveline solutions will cater to customers’ high demand for advanced technologies, leading to greater profitable growth.

Earlier in April, the company had completed the acquisition of Metaldyne that will enable it to expand its operating scale, customer base and the end market. Further, optimization of the company’s operating structure, elimination of redundant costs and purchasing leverage advantages will help American Axle generate an estimated annual run rate cost synergies of $100-$120 million by 2018.

The stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 5.6% upward to 75 cents over the last 30 days.

Price Performance

Shares of American Axle have gained 21.9% year to date, outperforming the 9.8% rise of the industry it belongs to.

Zacks Rank & Other Stocks to Consider

American Axle sports a Zacks Rank #1 (Strong Buy). A few other top-ranked companies in the auto space include Navistar International Corp. NAV, AB Volvo VLVLY and Allison Transmission Holdings, Inc. ALSN, each sporting the same bullish Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Navistar has an expected long-term growth rate of 5%.

Volvo has an expected long-term growth rate of 15%.

Allison Transmission has an expected long-term growth rate of 10%.

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