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Auto Stock Roundup: Tesla Sues Michigan Officials, Ford Responds to Trump
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Tesla Motors, Inc. (TSLA - Free Report) sued a number of Michigan State Officials in federal court, challenging the state’s law that prevents car manufacturers from selling directly to customers. Meanwhile, Ford Motor Co. (F - Free Report) defended its plans following the latest attack by Republican presidential candidate, Donald Trump.
Among the other major developments, General Motors Co. (GM - Free Report) signed an agreement with a Canadian labor union. Further, AutoZone, Inc. (AZO - Free Report) and Thor Industries Inc. (THO - Free Report) reported their fourth-quarter and fiscal 2016 earnings results.
1. Tesla has sued Michigan Secretary of State Ruth Johnson, Attorney General Bill Schuette and Governor Rick Snyder claiming that a law passed in 2014 is “anti-Tesla” and unconstitutional. The company is looking to prevent the enforcement of the law which prohibits automakers from selling without an intermediary dealership. This comes after the state recently denied a dealership license to Tesla.
Tesla contended that the rejection of its application for a dealership violates the Due Process, Equal Protection and Commerce Clauses of the Constitution. The company’s bid to register a repair facility for its vehicles in Michigan has not been decided on as yet (read more: Tesla Sues Michigan State Officials on Dealer Sales Law).
Tesla currently carries a Zacks Rank #3 (Hold).
2. Ford took to social media to respond to Donald Trump’s comments during the presidential debate on Monday. Trump criticized Ford’s recently announced plans to shift small car production to Mexico and claimed that it will lead to job loss in the U.S. He also pledged to levy a 35% tax on Ford cars that are imported to the U.S. from Mexico to ensure automakers do not shift production to that country.
However, Ford responded by stating that it has more hourly employees and higher production volume in the U.S. than any other auto manufacturer. It also cited figures to show its commitment to the country, revealing that it has created around 28,000 jobs in the U.S. and invested $12 billion in plants over the last five years. The automaker also revealed plans to start manufacturing two new models in the U.S. in 2018 (read more: What Did Ford Say About Trump's Debate Comments?).
Ford currently carries a Zacks Rank #5 (Strong Sell).
3. General Motors and Canada’s Unifor Union have signed a deal that the workers voted 64.7% to ratify. The new 4-year contract will help the workers secure their future in a weakening auto sector in Canada and ensure an investment of about C$554 million ($420.84 million) by the company in its Canadian facilities.
General Motors will be investing the majority of the promised amount at the Oshawa and St. Catherines manufacturing plants in Ontario. The two plants are expected to receive C$400 million ($303.86 million) and C$150 ($113.95 million) million, respectively. Post investment, the Oshawa plant will be the company’s first facility in North America to manufacture both trucks and cars.
On the other hand, the St. Catherines engine and transmission plant will be able to accommodate an engine production shift from Mexico to this plant. An investment in the parts’ distribution center at Woodstock is also expected (read more: General Motors Signs Union Deal; Ups Canadian Investments).
4. AutoZone reported a 12.2% rise in earnings per share to $14.30 for the fourth quarter (ended Aug 27, 2016) of fiscal 2016 from $12.75 recorded in the year-ago quarter. Earnings marginally surpassed the Zacks Consensus Estimate of $14.29. Quarterly revenues improved 3.3% year over year to $3.40 billion but lagged the Zacks Consensus Estimate of $3.44 billion.
For fiscal 2016, AutoZone reported a 13% rise in earnings per share to $40.70. Earnings, however, missed the Zacks Consensus Estimate of $40.73. Annual revenues increased 4.4% year over year to $10.64 billion, but marginally missed the Zacks Consensus Estimate of $10.68 billion (Read more: AutoZone Q4 Earnings Beat Estimates, Revenues Miss).
AutoZone currently carries a Zacks Rank #4 (Sell).
5. Thor Industries reported fourth-quarter (ended Jul 31, 2016) fiscal 2016 earnings of $1.57 per share that comfortably surpassed the Zacks Consensus Estimate of $1.37. Earnings also increased 19.8% from $1.31 per share recorded in the fourth quarter of fiscal 2015. Revenues rose 21.7% year over year to $1.29 billion and beat the Zacks Consensus Estimate of $1.28 billion. The year-over-year improvement in the top line was driven by strong industry growth and the acquisition of Jayco.
Earnings per share for fiscal 2016 were $4.91, up 29.6% from $3.79 earned in fiscal 2015 and ahead of the Zacks Consensus Estimate of $4.79. Sales for fiscal 2016 also improved 14.4% year over year to $4.58 billion, beating the Zacks Consensus Estimate of $4.52 billion (read more: Thor Industries Tops Q4 Earnings, Gains from Jayco).
Thor Industries carries a Zacks Rank #3.
Performance
The performance of auto sector companies was mixed last week. AutoZone gained the most, driven by strong year-over-year improvement in earnings and revenues. Meanwhile, Honda Motor Co., Ltd. (HMC - Free Report) was the biggest loser among the stocks listed below.
Over the long term, Harley-Davidson, Inc. (HOG - Free Report) was the biggest gainer, while Tesla lost the most over this period.
On Oct 3, 2016, automakers will post their U.S. sales figures for September. Some automakers may also report China and Europe sales figures in the coming week.
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Auto Stock Roundup: Tesla Sues Michigan Officials, Ford Responds to Trump
Tesla Motors, Inc. (TSLA - Free Report) sued a number of Michigan State Officials in federal court, challenging the state’s law that prevents car manufacturers from selling directly to customers. Meanwhile, Ford Motor Co. (F - Free Report) defended its plans following the latest attack by Republican presidential candidate, Donald Trump.
Among the other major developments, General Motors Co. (GM - Free Report) signed an agreement with a Canadian labor union. Further, AutoZone, Inc. (AZO - Free Report) and Thor Industries Inc. (THO - Free Report) reported their fourth-quarter and fiscal 2016 earnings results.
(Read the previous roundup here: Auto Stock Roundup for Sep 22, 2016)
Recap of the Week’s Most Important Stories
1. Tesla has sued Michigan Secretary of State Ruth Johnson, Attorney General Bill Schuette and Governor Rick Snyder claiming that a law passed in 2014 is “anti-Tesla” and unconstitutional. The company is looking to prevent the enforcement of the law which prohibits automakers from selling without an intermediary dealership. This comes after the state recently denied a dealership license to Tesla.
Tesla contended that the rejection of its application for a dealership violates the Due Process, Equal Protection and Commerce Clauses of the Constitution. The company’s bid to register a repair facility for its vehicles in Michigan has not been decided on as yet (read more: Tesla Sues Michigan State Officials on Dealer Sales Law).
Tesla currently carries a Zacks Rank #3 (Hold).
2. Ford took to social media to respond to Donald Trump’s comments during the presidential debate on Monday. Trump criticized Ford’s recently announced plans to shift small car production to Mexico and claimed that it will lead to job loss in the U.S. He also pledged to levy a 35% tax on Ford cars that are imported to the U.S. from Mexico to ensure automakers do not shift production to that country.
However, Ford responded by stating that it has more hourly employees and higher production volume in the U.S. than any other auto manufacturer. It also cited figures to show its commitment to the country, revealing that it has created around 28,000 jobs in the U.S. and invested $12 billion in plants over the last five years. The automaker also revealed plans to start manufacturing two new models in the U.S. in 2018 (read more: What Did Ford Say About Trump's Debate Comments?).
Ford currently carries a Zacks Rank #5 (Strong Sell).
3. General Motors and Canada’s Unifor Union have signed a deal that the workers voted 64.7% to ratify. The new 4-year contract will help the workers secure their future in a weakening auto sector in Canada and ensure an investment of about C$554 million ($420.84 million) by the company in its Canadian facilities.
General Motors will be investing the majority of the promised amount at the Oshawa and St. Catherines manufacturing plants in Ontario. The two plants are expected to receive C$400 million ($303.86 million) and C$150 ($113.95 million) million, respectively. Post investment, the Oshawa plant will be the company’s first facility in North America to manufacture both trucks and cars.
On the other hand, the St. Catherines engine and transmission plant will be able to accommodate an engine production shift from Mexico to this plant. An investment in the parts’ distribution center at Woodstock is also expected (read more: General Motors Signs Union Deal; Ups Canadian Investments).
Currently, General Motors carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4. AutoZone reported a 12.2% rise in earnings per share to $14.30 for the fourth quarter (ended Aug 27, 2016) of fiscal 2016 from $12.75 recorded in the year-ago quarter. Earnings marginally surpassed the Zacks Consensus Estimate of $14.29. Quarterly revenues improved 3.3% year over year to $3.40 billion but lagged the Zacks Consensus Estimate of $3.44 billion.
For fiscal 2016, AutoZone reported a 13% rise in earnings per share to $40.70. Earnings, however, missed the Zacks Consensus Estimate of $40.73. Annual revenues increased 4.4% year over year to $10.64 billion, but marginally missed the Zacks Consensus Estimate of $10.68 billion (Read more: AutoZone Q4 Earnings Beat Estimates, Revenues Miss).
AutoZone currently carries a Zacks Rank #4 (Sell).
5. Thor Industries reported fourth-quarter (ended Jul 31, 2016) fiscal 2016 earnings of $1.57 per share that comfortably surpassed the Zacks Consensus Estimate of $1.37. Earnings also increased 19.8% from $1.31 per share recorded in the fourth quarter of fiscal 2015. Revenues rose 21.7% year over year to $1.29 billion and beat the Zacks Consensus Estimate of $1.28 billion. The year-over-year improvement in the top line was driven by strong industry growth and the acquisition of Jayco.
Earnings per share for fiscal 2016 were $4.91, up 29.6% from $3.79 earned in fiscal 2015 and ahead of the Zacks Consensus Estimate of $4.79. Sales for fiscal 2016 also improved 14.4% year over year to $4.58 billion, beating the Zacks Consensus Estimate of $4.52 billion (read more: Thor Industries Tops Q4 Earnings, Gains from Jayco).
Thor Industries carries a Zacks Rank #3.
Performance
The performance of auto sector companies was mixed last week. AutoZone gained the most, driven by strong year-over-year improvement in earnings and revenues. Meanwhile, Honda Motor Co., Ltd. (HMC - Free Report) was the biggest loser among the stocks listed below.
Over the long term, Harley-Davidson, Inc. (HOG - Free Report) was the biggest gainer, while Tesla lost the most over this period.
Company
Last 1-Week Period
Last 6 Months
GM
-0.7%
+4.8%
F
0.0%
-6.3%
TSLA
+0.5%
-10.4%
TM
-1.5%
+8.6%
HMC
-2.0%
+6.5%
HOG
+0.8%
+8.9%
AAP
+1.8%
-8.5%
AZO
+2.1%
-3.9%
Auto-Tires-Trucks Sector Price Index
Auto-Tires-Trucks Sector Price Index
What’s Next in the Auto Space?
On Oct 3, 2016, automakers will post their U.S. sales figures for September. Some automakers may also report China and Europe sales figures in the coming week.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more.Click here for a peek at this private information >>