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Auto Stock Roundup: TSLA to Halt Production, TM Teams Up for Self-Driving Technology

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Artificial intelligence (AI) technology is being increasingly used in many industries, including the auto sector. In order to support its data-analysis processes, the Japanese auto giant Toyota Motor Corporation TM has taken the decision to partner with ALBERT Inc., a data-driven and analytical data-solution firm. This collaboration will aid Toyota in the development of automated driving technologies.

Moreover, this week, the electric vehicles (EV) company Tesla, Inc. TSLA has taken the decision to stop production for six days at its general assembly in Fremont, CA factory at the end of May. By the proposed halt in production, the company aims to address production bottlenecks and work on its assembly line.

Also, the week saw some important earnings releases. Magna International Inc.’s MGA first-quarter 2018 earnings and revenues beat the Zacks Consensus Estimate.

(Read the previous roundup here: Auto Stock Roundup for May 10, 2018)

Recap of the Week’s Most Important Stories

1. Much to the delight of its shareholders, Penske Automotive Group, Inc. PAG declared a hike in second-quarter 2018 cash dividend by around 2.9% to 35 cents per share. In the past year, the company hiked dividend by approximately 12.9%. The increased dividend will be paid on Jun 1, 2018, to shareholders of record as of May 21, 2018.

Notably, the company emphasizes on capital deployment and for that, it engages in share buybacks and hikes in dividend payment. The increase in dividend underscores the confidence of the company on its diversified transportation-services business model.

Prior to this, Penske Automotive raised dividend by 3% to 34 cents per share in January 2018. The latest increase in dividend marks the twenty-eighth consecutive quarterly rise.

Importantly, Penske Automotive, the Bloomfield Hills, MI-based international transportation services company reported earnings and revenues beat in first-quarter 2018. Results were aided by strong performance across each area of its business. (Read more: Penske Automotive Announces 2.9% Hike in Dividend)

Penske Automotive currently carries a Zacks Rank #3 (Hold).

2. Magna International reported first-quarter 2018 adjusted earnings per share of $1.84, surpassing the Zacks Consensus Estimate of $1.66 and the year-ago figure of $1.53.

Revenues increased 21% year over year to $10.79 billion. The top line also surpassed the Zacks Consensus Estimate of $10 billion. The rise in sales is primarily owing to growth across all its operating segments.

Moreover, the company reported a 16% increase in adjusted EBIT to $875 million from the year-ago figure of $818 million.

Revenues at the Body Exteriors & Structures segment was $4.6 billion in the reported quarter compared with $4.17 billion recorded in first-quarter 2017. However, adjusted EBIT declined 9% year over year to $340 million.

Revenues at the Power & Vision segment totaled $3.2 billion in comparison with $2.9 billion recorded in the prior-year quarter. Adjusted EBIT gained 30% year over year to $358 million.

Revenues at the Seating Systems segment totaled $1.47 billion compared with $1.34 billion recorded in the prior-year quarter. Adjusted EBIT rose 14% year over year to $130 million.

Revenues from the Complete Vehicles segment increased to $1.66 billion in the quarter under review from $527 million in first-quarter 2017. Adjusted EBIT mounted 9% year over year to $28 million. (Read more: Magna Q1 Earnings & Revenues Beat Estimates, Rise Y/Y)

Magna International currently carries a Zacks Rank #2 (Buy).

3. Honda Motor Co., Ltd. HMC reportedly made the announcement of investing over $30 million at its three facilities in Ohio. This investment is in sync with the company’s strategy to ramp up the production of its electric vehicles.

Notably, this Japanese auto giant just began the production of its new 2019 Honda Insight hybrid model at its Greensburg, IN facility. In sync with that strategy, the company announced to invest $29 million at the Honda Transmission Manufacturing of America plant in Logan County’s Russells Point. This facility is engaged in the production of Insight’s twin electric-motor unit, which is an important part of the vehicle’s powertrain. Additionally, the company is spending smaller amounts at its Marysville facility and Anna, OH engine plant.

The investment is in line with Honda’s Electrification Initiative. In the coming days, the company aims to introduce electrified powertrains in all of its core models. (Read more: Honda to Invest $30M in Ohio Facilities to Boost Production)

Currently, Honda has a Zacks Rank #5 (Strong Sell).

4. Toyota announced that it has decided to team up with ALBERT Inc. to analyze big data for the advancement of automated driving technology. Additionally, Toyota is expected to invest ¥400 million in ALBERT and is likely to acquire new shares of the company through a third-party share allocation dated May 30, 2018.

ALBERT is a data-driven, analytical data-solution firm that offers services in Japan. In recent years, the company is growing in imagery analysis for the development of automated driving technologies. The collaboration will enable Toyota to support its data-analysis processes for the advancement of its AI technologies.

This is not the first initiative taken by Toyota to develop self-driving technologies. In March, the company announced the creation of Tokyo-based Toyota Research Institute-Advanced Development with an investment of ¥300 billion ($2.8 billion). Prior to this, in January 2016, the company established the advanced research company, Toyota Research Institute (“TRI”) in the United States. (Read more: Toyota to Team Up With ALBERT for Self-Driving Technology)

Toyota currently carries a Zacks Rank #3.

5. Per Reuters, Tesla will halt production for six days at its general assembly in Fremont, CA factory between May 26 and May 31. Earlier, this electric-vehicle frontrunner struggled to ramp up the production of its new high-impact Model 3 sedan to the levels promised by the company. The proposed six-day shutdown at the end of May is aimed at to address production bottlenecks and work on its assembly line.

This is the third time this year that the company is preparing to halt its main automotive production line. Earlier, Tesla warned about a temporary 10-day production halt in second-quarter 2018. The company gave these warnings to better address bottlenecks that delayed the production of Model 3 sedans.

According to an article published by Electrek news portal, Tesla’s chief executive officer, Elon Musk told employees that the company is likely to attain a rate of 500 Model 3s per day this week, which implies 3,500 Model 3s per week. This is quite higher than the weekly production rate of 2,270, which it achieved in the last week of April. He added that the intended halt is aimed at giving the company time to make necessary upgrades, which is expected to aid it to produce 6,000 vehicles per week by the end of June. (Read more: Tesla to Halt Production Line to Address Model 3 Bottlenecks)

Currently, Tesla has a Zacks Rank #2.

Performance

Last week, Harley-Davidson, Inc. HOG recorded the maximum increase. The maximum decline was registered by Tesla.

In the last six months, maximum rise was recorded by Advance Auto Parts, Inc. AAP while General Motors Company’s GM shares declined the most.

CompanyLast WeekLast 6 Months
GM4.9%-13.3%
F3.1%-5.0%
TSLA-6.6%-9.1%
TM0.8%11.4%
HMC1.7%1.6%
HOG5.5%-10.4%
AAP0.9%33.4%
AZO-1.6%3.0%


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