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Auto Stock Roundup: Mixed November Sales, Ford Plans Fresh China Policy, AutoZone Reports

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Major automakers have come up with their November 2017 sales figures. The performance has been mixed. According to the data provided by Autodata Corp, the seasonally adjusted annualized rate (SAAR) of U.S. car and light truck sales fell to 17.48 million vehicles in November 2017 from 17.71 million in November 2016. Major automakers which reported overall sales decline in November are General Motors Company (GM - Free Report) , Toyota Motor Corporation (TM - Free Report) and Fiat Chrysler Automobiles NV . On the other hand, Ford Motor Co (F - Free Report) and Honda Motor Co., Ltd. (HMC - Free Report) reported increase in overall sales in November.

In a major development, Ford is reorienting its China expansion strategy. In order to boost sales growth in China and give more emphasis on electric vehicles (EVs), the company is planning to introduce 50 new vehicles in China by 2025, which includes 15 electric vehicles too. The U.S. auto giant’s sales in China have been dismal in recent months. Ford’s China plan is built around electric and connected vehicles, growth of SUVs, business structure streamlining and strong tie-up with customers in that country.

During the week, AutoZone, Inc. (AZO - Free Report) , the specialty retailer of automotive replacement parts, reported first-quarter fiscal 2018 (ended Nov 18, 2017) adjusted earnings per share of $9.96, beating the Zacks Consensus Estimate of $9.80. Quarterly revenues also surpassed the Zacks Consensus Estimate.

(Read the previous roundup here: Auto Stock Roundup for Nov 30, 2017)

Recap of the Week’s Most Important Stories

1.    Toyota said that it will be constructing the world’s first megawatt-scale carbonate fuel cell power generation plant at the Port of Long Beach. This facility will also house a hydrogen fueling station to assist the plant’s operations at the port.

Bio-wastes from California agricultural waste will be used to generate water, electricity and hydrogen at the facility, to be known as Tri-Gen.
Once it comes online in 2020, Tri-Gen will generate roughly 2.35 megawatts of electricity and 1.2 tons of hydrogen per day, capable enough to power about 2,350 average-sized homes and meet the daily needs of almost 1,500 vehicles.

The renewable power generation plant will be supplying fuel to Toyota Logistics Services' (TLS) operations at the port, making it the first facility of Toyota in North America to use 100% renewable energy (read more: Toyota to Construct Megawatt-Scale Fuel Cell Power Plant).

Currently, Toyota has a Zacks Rank #2 (Buy).

2.    Major automakers across the globe reported mixed vehicles sales figures in November. Per the data provided by Autodata Corp, the seasonally adjusted annualized rate (SAAR) of U.S. car and light truck sales declined to 17.48 million vehicles in November 2017 from 17.71 million in November 2016. Per a Reuters report, automakers expect stiff competition in December, as they rush to sell more vehicles in the remaining days of the year, for which they are offering huge discounts.

Leading automakers, General Motors and Toyota, reported sales decline of 2.9% and 3%, respectively, in November 2017 from the prior year. The decline can be attributed to reduced fleet sales to businesses, government and rental agencies. For Toyota, despite total sales declining, sale of SUVs, crossovers and pickups moved up. Another, big automaker which witnessed sales decline in November is Fiat Chrysler. The company saw a 4% decline in overall sales.

On the other hand, Ford registered a 6.7% rise in November sales. The U.S. auto giant’s fleet sales and retail sales increased 26% and 1.3%, respectively, from November 2016. Also, Japanese automaker Honda saw an 8.3% rise in sales. The increase was driven by sales of SUVs and crossovers (read more: Automakers Report Mixed November Sales, Lower 2018 Guidance).

While Fiat Chrysler has a Zacks Rank #2, General Motors, Ford and Honda carry a Zacks Rank #3 (Hold).

3.    AutoZone reported 6.8% year-over-year growth in adjusted earnings per share of $9.96 for first-quarter fiscal 2018. Earnings beat the Zacks Consensus Estimate of $9.80. Net income increased 1% to $281 million.

Quarterly revenues improved 4.9% year over year to $2.59 billion in the reported quarter. Also, the figure surpassed the Zacks Consensus Estimate of $2.54 billion. Domestic same-store sales (sales of stores open at least for one year) rose 2.3% year over year in the quarter.

Gross profit increased to $1.37 billion from $1.3 billion in the prior-year quarter. Operating profit (EBIT) rose to $468.8 million from $458.9 million registered in the first quarter of fiscal 2017.

Operating expenses, as a percentage of sales, increased to 34.6% from 34.1% a year ago (read more: AutoZone’s Q1 Earnings, Revenues Drive Past Estimates).

AutoZone carries a Zacks Rank #3.

4.    PACCAR Inc. (PCAR - Free Report) announced that its board members have approved an additional cash dividend of $1.2 per share, to be paid on Jan 4, 2018 to shareholders of record as of Dec 14, 2017.

Additionally, the company will also be paying its usual quarterly cash dividend of 25 cents per share on Mar 6, 2018 to shareholders of record on Feb 13, 2018.

Apart from rewarding shareholders with regular payouts since 1941, PACCAR has been consistently investing in developing vehicles and powertrain as well as improving its driver-assistance systems and truck technologies. Also, the company diligently puts focus on developing its production facilities and aftermarket distribution centers. Strong profits and robust cash flow enables PACCAR to take such initiatives (read more: Solid Cash Flow Drives PACCAR’s Extra Dividend Reward).

PACCAR sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

5.    Ford has comprehensively designed its next round of expansion strategy for China. The automaker believes that the progress it has already made in China is just the beginning, as huge potential remains untapped in the country.

China, the world’s largest carmaker, is also the frontrunner in EVs and SUVs.

Ford’s China plan hinges on electric and connected vehicles, growth of SUVs, business structure streamlining and strong tie up with that country’s customers. The U.S auto giant intends to introduce more than 50 new Ford and Lincoln vehicles in China by 2025. The aim is to give more emphasis on SUVs and EVs.

In a bid to strengthen ties with its Chinese customers, the company intends to introduce five additional Ford and Lincoln models in China in 2019, leveraging on local supply. Again, in order to streamline its business structure, Ford plans to bolster ties with its joint ventures partner Changan.

Also, the automaker is planning to set up one distribution services division, which will look into the marketing and sales and services related to Ford vehicles sold in the world’s second largest economy (read more: Ford Unveils Next Phase of China Expansion Strategy).

Performance

CompanyLast WeekLast 6 Months
GM-3.8%23.5%
F-1.4%11.5%
TSLA1.9%-15.3%
TM-2.8%16.3%
HMC-0.2%17.8%
HOG3.9%-3.8%
AAP-2.5%-22.6%
AZO1.4%16.6%


Last week, the steepest increase was registered by Harley-Davidson, Inc. and the sharpest decline was witnessed by General Motors.

In the last six months, the steepest increase and the sharpest decline were witnessed by General Motors and Advance Auto Parts, Inc., respectively.

What’s Next in the Auto Space?

Watch out for the usual news releases of other auto companies over the next week.

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