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Auto Stock Roundup: GM's Record Results, Tesla's Surprise Profit

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The third-quarter earnings season has turned out to be unexpectedly good for the auto sector. While General Motors Company (GM - Free Report) reported record results, Tesla Motors, Inc. (TSLA - Free Report) surprised investors with a profit after several quarters of losses. Lear Corp. (LEA - Free Report) and Penske Automotive Group, Inc. (PAG - Free Report) also surpassed earnings and revenue estimates.

Meanwhile, Toyota Motor Corp. (TM - Free Report) announced another recall related to Takata airbags even as the 11th death related to this fault was reported in the U.S.

(Read the previous roundup here: Auto Stock Roundup for Oct 20, 2016)

Recap of the Week’s Most Important Stories

1. General Motors posted adjusted earnings of $1.72 per share in the third quarter of 2016 that comfortably surpassed the Zacks Consensus Estimate of $1.44. The figure marked a third-quarter record for the company. Earnings surged 14.7% from $1.50 per share recorded in the third quarter of 2015. Revenues were a record $42.8 billion, 10.3% higher than $38.8 billion in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $40.09 billion.

Based on strong expectations for the second half of 2016, General Motors projects full-year adjusted earnings per share close to the upper end of its guidance $5.50–$6.00. The outlook is significantly higher than earnings of $5.02 per share recorded in 2015 (read more: General Motors Beats on Q3 Earnings & Revenues).

General Motors currently carries a Zacks Rank #2 (Buy).

2. Tesla reported a profit of 14 cents per share in the third quarter of 2016, beating the Zacks Consensus Estimate of a loss of 64 cents per share. Revenues improved 145% year over year to $2.30 billion, surpassing the Zacks Consensus Estimate of $2.13 billion.

The automaker is targeting 25,000 vehicle deliveries in the fourth of 2016.

Tesla currently carries a Zacks Rank #4 (Sell).

3. Lear Corp. posted adjusted earnings per share of $3.19 in the third quarter of 2016, up 25% from $2.56 in the year-ago quarter. Moreover, earnings beat the Zacks Consensus Estimate of $3.02. Revenues increased 4.5% year over year to a record $4.53 billion, beating the Zacks Consensus Estimate of $4.48 billion.

For 2016, Lear Corp. raised its adjusted net income forecast to $980 million to $1 billion from the prior guidance of $935–$975 million.

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

4. Penske Automotive’s third-quarter 2016 earnings per share improved 7.3% to $1.03 from 96 cents earned a year ago. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.01. Revenues grew 3.9% year over year to $5.2 billion, surpassing the Zacks Consensus Estimate of $5.04 billion.

Penske Automotive currently carries a Zacks Rank #4.

5. Toyota announced the recall of another 5.8 million vehicles globally to replace faulty Takata airbag inflators. The recall includes around 20,000 inflators which were fitted as replacement parts after an initial recall in 2010. However, these replacements are also suspected to be at risk, resulting in their recall. Defective Takata airbag inflators have been linked to around 16 deaths globally, including 11 in the U.S.

Toyota carries a Zacks Rank #4.

Performance

The performance of auto sector companies was mixed last week. Ford Motor Co. (F - Free Report) lost the most among the stocks listed below. Meanwhile, Tesla was the biggest loser over the last six months.

Harley-Davidson, Inc. (HOG - Free Report) gained the most over both periods.

Company

Last 1-Week Period

Last 6 Months

GM

-0.8%

-1.8%

F

-1.1%

-13.0%

TSLA

-0.6%

-19.6%

TM

+0.5%

+8.6%

HMC

+2.3%

+5.2%

HOG

+3.3%

+14.4%

AAP

+1.2%

-9.6%

AZO

+0.1%

-3.7%

Auto-Tires-Trucks Sector Price Index

Auto-Tires-Trucks Sector Price Index

What’s Next in the Auto Space?

Ford will report third-quarter financial results before the market opens today. Many auto companies, including Honda, will release their financial results in the coming week.

Further, automakers will report their U.S. sales for October on Nov 1.

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