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American Axle (AXL) Rides on New Launches, Strategic Actions


On Apr 10, we issued an updated research report on American Axle & Manufacturing Holdings, Inc. AXL.

American Axle is anticipated to attain record sales and profits in 2018. For the year, sales are expected to be around $7 billion compared with $6.27 billion recorded in 2017. In 2018, the company plans to support 50 major projects and program launches, including electric and hybrid driveline program. This should lead to profitable sales and business diversification.

The company is undertaking various strategic actions to diversify the business and customer base to generate incremental revenues. Apart from GM and Fiat Chrysler, it supplies driveline systems and other components to Jaguar Land Rover, Ford, Harley-Davidson, Volkswagen, Nissan, Honda, Mercedes-Benz, Isuzu and various other OEMs. In addition, the company is gaining new businesses for its latest innovative driveline solution. It expects this to support customer demand for advanced technologies, thus, leading to greater business diversification and profitable growth.

Rising capital expenditure is a cause of concern for the company. This is primarily due to new program launches, integration and acquisitions as well as accounting adjustments and related effects in 2017.

In the past three months, American Axle has underperformed the industry it belongs to. Its shares have plunged 14.8% compared with the industry’s decline of 5.5%.

American Axle & Manufacturing carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks in the auto space are Honda Motor Co., Ltd. HMC, Allison Transmission Holdings, Inc. ALSN and Toyota Motor Corporation TM. While both Honda and Allison Transmission Holdings sport a Zacks Rank #1, Toyota carries a Zacks Rank #2 (Buy).

Honda has expected long-term growth rate of 5.2%. In the past year, shares of the company have returned 23.8%.

Allison Transmission has expected long-term growth rate of 10%. In the past year, shares of the company have returned 13.2%.

Toyota has expected long-term growth rate of 6.1%. Shares of the company have advanced 21.7% in the past year.

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