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American Axle (AXL) Down 7.7% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
American Axle Q4 Earnings Beat Estimates, Rise Y/Y
American Axle posted adjusted earnings of $0.78 per share for the fourth quarter of 2016 that comfortably beat the Zacks Consensus Estimate of $0.69. Earnings also increased from $0.67 recorded in the fourth quarter of 2015.
The company reported net income of $46.9 million or $0.59 per share in the fourth quarter of 2016 compared with $62.9 million or $0.81 in the year-ago quarter.
Revenues decreased to $946.5 million in the reported quarter from $958.4 million a year ago. The top line fell short of the Zacks Consensus Estimate of $956 million.
American Axle’s content-per-vehicle – dollar value of product sales supporting customers’ North American light truck and sport utility vehicle (SUV) programs – dropped to $1,634 from $1,645 in fourth quarter of 2015. The company’s non-General Motors Company sales declined to $323 million from $323.5 million in the year-ago quarter.
Gross profit increased to $176.1 million (18.6% of sales) in fourth-quarter 2016 from $159.8 million (16.7% of sales) in the prior-year quarter. Meanwhile, adjusted operating income increased to $91.7 million from $87.1 million a year ago.
2016 Results
American Axle recorded earnings of $3.30 per share in 2016, beating the Zacks Consensus Estimate of $3.17. In comparison, the company generated adjusted earnings of $2.88 per share in 2015.
Revenues increased 1.3% to $3.95 billion in 2016 from $3.90 billion in 2015. However, the figure marginally missed the Zacks Consensus Estimate of $3.97 billion.
Financial Position
American Axle had cash and cash equivalents of $481.2 million as of Dec 31, 2016, up from $282.5 million as of Dec 31, 2015. Long-term debt was $1.4 billion as of Dec 31, 2017, compared with $1.38 billion at the end of 2015.
Cash flow from operations in 2016 was $407.6 million, compared with $377.6 million in 2015. Net capital spending of the company was $221.3 million in 2016, compared with $193.2 million in the prior year. American Axle’s free cash flow was $198.6 million in 2016 compared with $189.5 million a year ago.
2017 Outlook
For 2017, sales are expected in the range of $4.1 billion to $4.2 billion, marginally higher than $3.95 billion recorded in 2016. The sales expectation is based on the launch of programs in the company’s new and incremental business backlog. The company also assumes that U.S. industry sales on a seasonally adjusted annualized rate (“SAAR”) basis will be around 17.5 million light vehicle units in 2017.
Earnings before income taxes, depreciation and amortization (EBITDA) margin will likely be in the range of 15.5–16% in 2017. For 2017, American Axle expects free cash flow in the range of $175−$200 million. In addition, capital spending will be around 6.5% to 7% of sales this year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter.
American Axle & Manufacturing Holdings, Inc. Price and Consensus
At this time, American Axle's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.
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American Axle (AXL) Down 7.7% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) . Shares have lost about 7.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Recent Earnings
American Axle Q4 Earnings Beat Estimates, Rise Y/Y
American Axle posted adjusted earnings of $0.78 per share for the fourth quarter of 2016 that comfortably beat the Zacks Consensus Estimate of $0.69. Earnings also increased from $0.67 recorded in the fourth quarter of 2015.
The company reported net income of $46.9 million or $0.59 per share in the fourth quarter of 2016 compared with $62.9 million or $0.81 in the year-ago quarter.
Revenues decreased to $946.5 million in the reported quarter from $958.4 million a year ago. The top line fell short of the Zacks Consensus Estimate of $956 million.
American Axle’s content-per-vehicle – dollar value of product sales supporting customers’ North American light truck and sport utility vehicle (SUV) programs – dropped to $1,634 from $1,645 in fourth quarter of 2015. The company’s non-General Motors Company sales declined to $323 million from $323.5 million in the year-ago quarter.
Gross profit increased to $176.1 million (18.6% of sales) in fourth-quarter 2016 from $159.8 million (16.7% of sales) in the prior-year quarter. Meanwhile, adjusted operating income increased to $91.7 million from $87.1 million a year ago.
2016 Results
American Axle recorded earnings of $3.30 per share in 2016, beating the Zacks Consensus Estimate of $3.17. In comparison, the company generated adjusted earnings of $2.88 per share in 2015.
Revenues increased 1.3% to $3.95 billion in 2016 from $3.90 billion in 2015. However, the figure marginally missed the Zacks Consensus Estimate of $3.97 billion.
Financial Position
American Axle had cash and cash equivalents of $481.2 million as of Dec 31, 2016, up from $282.5 million as of Dec 31, 2015. Long-term debt was $1.4 billion as of Dec 31, 2017, compared with $1.38 billion at the end of 2015.
Cash flow from operations in 2016 was $407.6 million, compared with $377.6 million in 2015. Net capital spending of the company was $221.3 million in 2016, compared with $193.2 million in the prior year. American Axle’s free cash flow was $198.6 million in 2016 compared with $189.5 million a year ago.
2017 Outlook
For 2017, sales are expected in the range of $4.1 billion to $4.2 billion, marginally higher than $3.95 billion recorded in 2016. The sales expectation is based on the launch of programs in the company’s new and incremental business backlog. The company also assumes that U.S. industry sales on a seasonally adjusted annualized rate (“SAAR”) basis will be around 17.5 million light vehicle units in 2017.
Earnings before income taxes, depreciation and amortization (EBITDA) margin will likely be in the range of 15.5–16% in 2017. For 2017, American Axle expects free cash flow in the range of $175−$200 million. In addition, capital spending will be around 6.5% to 7% of sales this year.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter.
American Axle & Manufacturing Holdings, Inc. Price and Consensus
American Axle & Manufacturing Holdings, Inc. Price and Consensus | American Axle & Manufacturing Holdings, Inc. Quote
VGM Scores
At this time, American Axle's stock has an average Growth Score of 'C', though it is lagging a bit on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.