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American Axle (AXL) Down 5.8% 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 5.8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is AXL 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.
American Axle Q4 Earnings Surpass Estimates, Up Y/Y
American Axle posted adjusted earnings of 89 cents per share for the fourth quarter, beating the Zacks Consensus Estimate of 77 cents. The reported figure excludes the impact of restructuring and acquisition-related costs, debt-refinancing and redemption costs plus non-recurring items including the tax effect. In fourth-quarter 2016, adjusted earnings were 78 cents.
The company reported net income of $106.3 million or 93 cents per share in the fourth-quarter 2017, compared with $46.9 million or 59 cents in the year-ago quarter.
Revenues increased to $1.73 billion in the reported quarter from the year-ago figure of $946.5 million. The top line also surpassed the Zacks Consensus Estimate of $1.69 billion.
American Axle’s SG&A (Selling, General & Administrative) expenses were $101 million for the reported period in comparison to $83 million in the prior-year quarter.
Gross profit increased to $294.3 million in fourth-quarter 2017 from $176.1 million in the prior-year quarter. Operating income increased to $148.6 million from $69.5 million a year ago.
Full-Year 2017 Results
American Axle reported adjusted earnings of $3.75 per share in 2017, up from $3.3 per share earned in 2016.
Net income was $337 million from $240.7 million recorded in 2016. Revenues increased to $6.27 billion from $3.95 billion in 2016.
Financial Position
American Axle had cash and cash equivalents of $376.8 million as of Dec 31, 2017, up from $481.2 million as of Dec 31, 2016. Long-term debt was $4 billion as of Dec 31, 2017, compared with $1.4 billion on Dec 31, 2016.
Cash flow from operations in fourth-quarter 2017 was $226 million in comparison with the prior year's figure of $117 million. At the quarter-end, American Axle’s adjusted free cash flow was $50.9 million compared with $62.8 million for the same period of last year. The figure excludes the impact of cash payments for restructuring and acquisition-related costs, settlements of pre-existing accounts payable balances with acquired entities and interest payments upon the settlement of acquired company debt.
2018 Outlook
For 2018, the company’s sales expectation is roughly $7 billion, mostly depending on its anticipated program launches and the assumption that the U.S. industry sales on a seasonally adjusted annualized rate (SAAR) will be around 16.8-17 million light-vehicle units in 2018.
Further, adjusted earnings before income taxes, depreciation and amortization (EBITDA) margin are expected to be around 17.5-18% of sales in 2018. Also, American Axle’s guidance for adjusted free cash is assumed to be 5% of sales in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 6.3% due to these changes.
American Axle & Manufacturing Holdings, Inc. Price and Consensus
At this time, AXL has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, AXL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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American Axle (AXL) Down 5.8% 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 5.8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is AXL 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.
American Axle Q4 Earnings Surpass Estimates, Up Y/Y
American Axle posted adjusted earnings of 89 cents per share for the fourth quarter, beating the Zacks Consensus Estimate of 77 cents. The reported figure excludes the impact of restructuring and acquisition-related costs, debt-refinancing and redemption costs plus non-recurring items including the tax effect. In fourth-quarter 2016, adjusted earnings were 78 cents.
The company reported net income of $106.3 million or 93 cents per share in the fourth-quarter 2017, compared with $46.9 million or 59 cents in the year-ago quarter.
Revenues increased to $1.73 billion in the reported quarter from the year-ago figure of $946.5 million. The top line also surpassed the Zacks Consensus Estimate of $1.69 billion.
American Axle’s SG&A (Selling, General & Administrative) expenses were $101 million for the reported period in comparison to $83 million in the prior-year quarter.
Gross profit increased to $294.3 million in fourth-quarter 2017 from $176.1 million in the prior-year quarter. Operating income increased to $148.6 million from $69.5 million a year ago.
Full-Year 2017 Results
American Axle reported adjusted earnings of $3.75 per share in 2017, up from $3.3 per share earned in 2016.
Net income was $337 million from $240.7 million recorded in 2016. Revenues increased to $6.27 billion from $3.95 billion in 2016.
Financial Position
American Axle had cash and cash equivalents of $376.8 million as of Dec 31, 2017, up from $481.2 million as of Dec 31, 2016. Long-term debt was $4 billion as of Dec 31, 2017, compared with $1.4 billion on Dec 31, 2016.
Cash flow from operations in fourth-quarter 2017 was $226 million in comparison with the prior year's figure of $117 million. At the quarter-end, American Axle’s adjusted free cash flow was $50.9 million compared with $62.8 million for the same period of last year. The figure excludes the impact of cash payments for restructuring and acquisition-related costs, settlements of pre-existing accounts payable balances with acquired entities and interest payments upon the settlement of acquired company debt.
2018 Outlook
For 2018, the company’s sales expectation is roughly $7 billion, mostly depending on its anticipated program launches and the assumption that the U.S. industry sales on a seasonally adjusted annualized rate (SAAR) will be around 16.8-17 million light-vehicle units in 2018.
Further, adjusted earnings before income taxes, depreciation and amortization (EBITDA) margin are expected to be around 17.5-18% of sales in 2018. Also, American Axle’s guidance for adjusted free cash is assumed to be 5% of sales in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 6.3% due to these changes.
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, AXL has a great Growth Score of A, though it is lagging a bit on the momentum front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, AXL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.