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Auto Stock Roundup: March Sales Up, TSLA Production Grows, GM to End Monthly Report
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The auto sector staged a comeback in March after sagging sales performance in February. A majority of automakers reported a rise in their March U.S. sales. A robust economy, product launches and fat discounts enabled auto players to witness a year-over-year rise in new vehicle sales. Even concerns over high interest rates and elevated gasoline prices could not deter Americans’ new-found liking for sport utility vehicles (SUVs) and pickup trucks, albeit at the cost of sedans and passenger cars.
Per Autodata, auto industry sales rose 2.5% to 1,653,529 while new vehicle sales gained 6% in March. Moreover, the seasonally adjusted annual rate (SAAR) was 17.5 million in comparison to 16.8 million, a year ago.
Also, during the week, just prior to the March sales release, General Motors Company (GM - Free Report) reportedly said that it will do away with the age-old monthly sales report in favor of quarterly reporting. The U.S. auto giant is of the opinion that 30 days is too short to absorb short-term volatility, therefore rendering the monthly figures exaggerated. It feels that the quarterly reporting system would better provide the correct picture of the health of the company as well as that of the industry.
Also, the electric vehicles (EVs) maker, Tesla, Inc. (TSLA - Free Report) published its production figures for first-quarter 2018, which totaled 34,494 vehicles, up 40% sequentially. This happens to be the most productive quarter in the history of Tesla. Out of the total vehicles produced, 24,728 were Model S and Model X, and 9,766 were Model 3. The Model 3 output increased significantly on a sequential basis. However, the company missed its target of producing 2,500 Model 3s a week by the end of first-quarter 2018. Actually, it produced 2020 Model 3 cars over the last seven days. Despite the production target miss, the first-quarter 2018 performance of Tesla looks encouraging.
1. Per Fox Business, Tesla has announced that it will voluntarily recall 123,000 of its luxury Model S sedans across the globe to fix the issue of faulty steering components.
The Palo Alto, CA-based company stated that the recall includes Model S vehicles built before April 2016 and is devoid of any Model X or Model 3 versions. The company explained that it has detected “excessive corrosion” in the power steering bolts of the recalled vehicles. This glitch might result in reduced power steering.
The EV maker will repair damages by replacing the specific bolts in the power steering component. The company has also intimated its plans to contact the affected customers directly for scheduling an appointment once the parts are available in their respective regions.
However, the recent recall has further added to Tesla’s woes, which is already grappling with several challenges, particularly with respect to the production of Model 3 sedan, the low-cost EV targeting the mass market. (Read more: Vehicles Recall Continues Unabated: Tesla, No Exception)
Tesla carries a Zacks Rank #4 (Sell).
2. In a pioneering move, General Motors has reportedly taken the decision to abandon its usual practice of reporting sales on a monthly basis in favor of quarterly reporting. The U.S. auto giant is of the opinion that sales releases every month do not provide the true picture of the company’s intricate operations or the health of the auto industry, as it includes short-term fluctuations. However, per management, quarterly sales releases will give a better idea about the same.
Abandoning monthly sales reports can be attributed to a number of factors. It has been witnessed that the effect of volatility does not smoothen adequately in the 30-day period. This has sometimes resulted in exaggerated monthly sales figures. According to the automaker, incentive campaigns, abnormal weather or product launches tilt monthly sales figures up or down.
However, the company intends to provide investors and others a less volatile, longer-term metric to evaluate its performance. Replacing the monthly cycle with a quarterly one is likely to aid the company in this respect. This is echoed in the statement of Kurt McNeil, General Motors’ U.S. vice president for sales operations, “Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market.” McNeil further said, “Reporting sales quarterly better aligns with our business, and the quality of information will make it easier to see how the business is performing.” (Read more: General Motors to Drop Monthly Sales Report, Enticing Others)
3. CarMax Inc. (KMX - Free Report) posted earnings per share of 67 cents in the fourth quarter of fiscal 2018 (ended Feb 28, 2018), reflecting a decline of 17.3% from 81 cents earned a year ago. Adjusted earnings came in at 77 cents per share. Earnings missed the Zacks Consensus Estimate of 89 cents.
Net sales and operating revenues in the reported quarter increased 0.8% year over year to $4.1 billion. However, this figure missed the Zacks Consensus Estimate of $4.2 billion.
In fiscal 2018, earnings were $3.60 per share, up 10.4% year over year.
In fiscal 2018, net sales and operating revenues were $17.1 billion, up 7.8% from fiscal 2017.
During the quarter, used-vehicle revenues decreased 0.6% to $3.4 billion as unit sales declined 3.1% to 170,572 vehicles. Comparable-store used-vehicle unit sales decreased 8% in the quarter.
Wholesale vehicle revenues grew 13.2% to $527.2 million in the quarter. Unit sales increased 8.9% to 99,226 vehicles. The average selling price of wholesale vehicles rose 3.4% to $5,076.
Other sales and revenues declined 4.5% year over year. The company’s extended protection plan (EPP) revenues decreased 2.4%.
CarMax Auto Finance (CAF) reported an increase of 21.9% in income to $101.1 million in fourth-quarter fiscal 2018.
During the fourth quarter, CarMax opened four stores. It entered into two new television markets and added two stores in existing television markets. (Read more: CarMax’s Earnings and Revenues Miss Estimates in Q4).
CarMax carries a Zacks Rank #3 (Hold).
4. Johnson Controls International plc (JCI - Free Report) reportedly acquired Nashville-based Smartvue Corporation. The acquired company is a provider of Internet of Things (IoT) and videos that empower IoT video services and cloud video surveillance. The terms of the deal have not been made public yet.
This recent acquisition will enable Johnson Controls to offer a cloud-based video surveillance solution under its building technology offerings. The newly-added solution will help the company offer better intelligence and business data to customers while adding value for its partners.
Per management, Smartvue’s open API cloud architecture will help it in strengthening its ability to offer video-as-a-service in a more cost-efficient, fast and protected way. At present, Smartvue’s customers in 140 countries consist of cable companies, security firms and storage providers among others. (Read more: Johnson Controls Acquires Smartvue to Boost Video Solution)
Johnson Controls carries a Zacks Rank #2 (Buy).
5. Copart, Inc. (CPRT - Free Report) reported the expansion of its location at Tucson, AZ. Address of the new site is 5600 South Arcadia Avenue in Tucson, AZ.
Per management, the location expansion at 5600 South Arcadia Avenue in Tucson, AZ will enable it to offer improved efficiencies for both buyers and sellers in the state. Further, with this development, the company’s Tuscan team is now equipped to store a larger volume of vehicles for auction.
Online auctions at the Tuscan location are held every Friday at 2 p.m. CT. Buyers can participate in the auction and bid for the inventory through the company’s website or its application available on iOS and android devices. Also, during business hours, bidding kiosks can be accessed at the hub.
Copart sports a Zacks Rank #1.
Performance
Last week, the maximum rise was witnessed by Tesla. Toyota, Advance Auto Parts, Inc. (AAP - Free Report) and AutoZone, Inc. (AZO - Free Report) recorded a decline.
In the last six months, the maximum rise was recorded by Advance Auto Parts while Tesla shares declined the most.
Company
Last Week
Last 6 Months
GM
7.2%
-15.4%
F
4.3%
-8%
TSLA
11.3%
-19.6%
TM
-1.2%
4.8%
HMC
0.7%
15.2%
HOG
0.0%
-7.6%
AAP
-1.3%
21.4%
AZO
-1.3%
4.5%
What’s Next in the Auto Space?
Watch out for the usual news releases of other auto companies over the next week.
Today’s Stocks from Zacks’ Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Auto Stock Roundup: March Sales Up, TSLA Production Grows, GM to End Monthly Report
The auto sector staged a comeback in March after sagging sales performance in February. A majority of automakers reported a rise in their March U.S. sales. A robust economy, product launches and fat discounts enabled auto players to witness a year-over-year rise in new vehicle sales. Even concerns over high interest rates and elevated gasoline prices could not deter Americans’ new-found liking for sport utility vehicles (SUVs) and pickup trucks, albeit at the cost of sedans and passenger cars.
Per Autodata, auto industry sales rose 2.5% to 1,653,529 while new vehicle sales gained 6% in March. Moreover, the seasonally adjusted annual rate (SAAR) was 17.5 million in comparison to 16.8 million, a year ago.
Also, during the week, just prior to the March sales release, General Motors Company (GM - Free Report) reportedly said that it will do away with the age-old monthly sales report in favor of quarterly reporting. The U.S. auto giant is of the opinion that 30 days is too short to absorb short-term volatility, therefore rendering the monthly figures exaggerated. It feels that the quarterly reporting system would better provide the correct picture of the health of the company as well as that of the industry.
Also, the electric vehicles (EVs) maker, Tesla, Inc. (TSLA - Free Report) published its production figures for first-quarter 2018, which totaled 34,494 vehicles, up 40% sequentially. This happens to be the most productive quarter in the history of Tesla. Out of the total vehicles produced, 24,728 were Model S and Model X, and 9,766 were Model 3. The Model 3 output increased significantly on a sequential basis. However, the company missed its target of producing 2,500 Model 3s a week by the end of first-quarter 2018. Actually, it produced 2020 Model 3 cars over the last seven days. Despite the production target miss, the first-quarter 2018 performance of Tesla looks encouraging.
(Read the previous roundup here: Auto Stock Roundup for Mar 29, 2018)
Recap of the Week’s Most Important Stories
1. Per Fox Business, Tesla has announced that it will voluntarily recall 123,000 of its luxury Model S sedans across the globe to fix the issue of faulty steering components.
The Palo Alto, CA-based company stated that the recall includes Model S vehicles built before April 2016 and is devoid of any Model X or Model 3 versions. The company explained that it has detected “excessive corrosion” in the power steering bolts of the recalled vehicles. This glitch might result in reduced power steering.
The EV maker will repair damages by replacing the specific bolts in the power steering component. The company has also intimated its plans to contact the affected customers directly for scheduling an appointment once the parts are available in their respective regions.
However, the recent recall has further added to Tesla’s woes, which is already grappling with several challenges, particularly with respect to the production of Model 3 sedan, the low-cost EV targeting the mass market. (Read more: Vehicles Recall Continues Unabated: Tesla, No Exception)
Tesla carries a Zacks Rank #4 (Sell).
2. In a pioneering move, General Motors has reportedly taken the decision to abandon its usual practice of reporting sales on a monthly basis in favor of quarterly reporting. The U.S. auto giant is of the opinion that sales releases every month do not provide the true picture of the company’s intricate operations or the health of the auto industry, as it includes short-term fluctuations. However, per management, quarterly sales releases will give a better idea about the same.
Abandoning monthly sales reports can be attributed to a number of factors. It has been witnessed that the effect of volatility does not smoothen adequately in the 30-day period. This has sometimes resulted in exaggerated monthly sales figures. According to the automaker, incentive campaigns, abnormal weather or product launches tilt monthly sales figures up or down.
However, the company intends to provide investors and others a less volatile, longer-term metric to evaluate its performance. Replacing the monthly cycle with a quarterly one is likely to aid the company in this respect. This is echoed in the statement of Kurt McNeil, General Motors’ U.S. vice president for sales operations, “Thirty days is not enough time to separate real sales trends from short-term fluctuations in a very dynamic, highly competitive market.” McNeil further said, “Reporting sales quarterly better aligns with our business, and the quality of information will make it easier to see how the business is performing.” (Read more: General Motors to Drop Monthly Sales Report, Enticing Others)
General Motors sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
3. CarMax Inc. (KMX - Free Report) posted earnings per share of 67 cents in the fourth quarter of fiscal 2018 (ended Feb 28, 2018), reflecting a decline of 17.3% from 81 cents earned a year ago. Adjusted earnings came in at 77 cents per share. Earnings missed the Zacks Consensus Estimate of 89 cents.
Net sales and operating revenues in the reported quarter increased 0.8% year over year to $4.1 billion. However, this figure missed the Zacks Consensus Estimate of $4.2 billion.
In fiscal 2018, earnings were $3.60 per share, up 10.4% year over year.
In fiscal 2018, net sales and operating revenues were $17.1 billion, up 7.8% from fiscal 2017.
During the quarter, used-vehicle revenues decreased 0.6% to $3.4 billion as unit sales declined 3.1% to 170,572 vehicles. Comparable-store used-vehicle unit sales decreased 8% in the quarter.
Wholesale vehicle revenues grew 13.2% to $527.2 million in the quarter. Unit sales increased 8.9% to 99,226 vehicles. The average selling price of wholesale vehicles rose 3.4% to $5,076.
Other sales and revenues declined 4.5% year over year. The company’s extended protection plan (EPP) revenues decreased 2.4%.
CarMax Auto Finance (CAF) reported an increase of 21.9% in income to $101.1 million in fourth-quarter fiscal 2018.
During the fourth quarter, CarMax opened four stores. It entered into two new television markets and added two stores in existing television markets. (Read more: CarMax’s Earnings and Revenues Miss Estimates in Q4).
CarMax carries a Zacks Rank #3 (Hold).
4. Johnson Controls International plc (JCI - Free Report) reportedly acquired Nashville-based Smartvue Corporation. The acquired company is a provider of Internet of Things (IoT) and videos that empower IoT video services and cloud video surveillance. The terms of the deal have not been made public yet.
This recent acquisition will enable Johnson Controls to offer a cloud-based video surveillance solution under its building technology offerings. The newly-added solution will help the company offer better intelligence and business data to customers while adding value for its partners.
Per management, Smartvue’s open API cloud architecture will help it in strengthening its ability to offer video-as-a-service in a more cost-efficient, fast and protected way. At present, Smartvue’s customers in 140 countries consist of cable companies, security firms and storage providers among others. (Read more: Johnson Controls Acquires Smartvue to Boost Video Solution)
Johnson Controls carries a Zacks Rank #2 (Buy).
5. Copart, Inc. (CPRT - Free Report) reported the expansion of its location at Tucson, AZ. Address of the new site is 5600 South Arcadia Avenue in Tucson, AZ.
Per management, the location expansion at 5600 South Arcadia Avenue in Tucson, AZ will enable it to offer improved efficiencies for both buyers and sellers in the state. Further, with this development, the company’s Tuscan team is now equipped to store a larger volume of vehicles for auction.
Online auctions at the Tuscan location are held every Friday at 2 p.m. CT. Buyers can participate in the auction and bid for the inventory through the company’s website or its application available on iOS and android devices. Also, during business hours, bidding kiosks can be accessed at the hub.
Copart sports a Zacks Rank #1.
Performance
Last week, the maximum rise was witnessed by Tesla. Toyota, Advance Auto Parts, Inc. (AAP - Free Report) and AutoZone, Inc. (AZO - Free Report) recorded a decline.
In the last six months, the maximum rise was recorded by Advance Auto Parts while Tesla shares declined the most.
What’s Next in the Auto Space?
Watch out for the usual news releases of other auto companies over the next week.
Today’s Stocks from Zacks’ Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>