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The coronavirus pandemic affected production and sales of vehicles as carmakers had to shut down facilities in late March across the United States. The outbreak also slowed down the sector’s sales with demand being hit hard. However, with many states having eased restrictions, automakers have restarted their operations but under some restrictions for controlling the spread of infections.
Against this backdrop, we take a look at some big automobile earnings releases and see if these can impact ETFs exposed to the space.
Earnings in Focus
On Jul 22, Tesla (TSLA - Free Report) reported earnings per share of $2.18 for second-quarter 2020. The Zacks Consensus Estimate was of a loss of 49 cents per share. This outperformance came in from higher-than-expected revenues, which totaled $6.04 billion, beating the consensus mark of $4.96 billion. While the bottom line improved significantly from the prior-year quarter’s loss of $1.12 per share, the top line recorded a decline of 5%. During the second quarter, Tesla reported delivery and production of 90,891 and 82,272 vehicles, respectively, reflecting a year-over-year decrease of 5% for both metrics.
Tesla had cash and cash equivalents of $8.62 billion as of Jun 30, 2020 compared with $8.08 billion on Mar 31, 2020. Tesla maintains the target of exceeding 500,000 vehicle deliveries despite the recent production interruptions. However, amid coronavirus-related setbacks, Tesla refrained from providing any profit or cash flow forecast.
On Jul 30, Ford Motor Company (F - Free Report) reported second-quarter 2020 adjusted loss per share of 35 cents, narrower than the Zacks Consensus Estimate of a loss of $1.25. However, in the prior-year quarter adjusted earnings had come in at 32 cents per share. This year-over-year deterioration can be attributed to lower automotive sales across all markets served. The company’s second-quarter sales were affected by depressed demand for vehicles, largely due to the coronavirus outbreak.
For the June quarter, the company reported an adjusted negative EBIT of $1.9 billion, as against a profit of $1.7 billion recorded in the corresponding period of 2019. The U.S. auto giant reported net profit of $1.1 billion. Ford had had cash and cash equivalents of $30.9 billion as of Jun 30, 2020 compared with $17.5 billion on Dec 31, 2019.
During the reported quarter, Ford reported revenues of $19.37 billion, outpacing the Zacks Consensus Estimate of $14.98 billion. In the prior-year quarter, the figure was $38.85 billion.
On Jul 29, General Motors Company (GM - Free Report) reported an adjusted loss of 50 cents per share in second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $1.72. In the year-ago quarter, the company had recorded earnings of $1.64 per share. The company reported revenues of $16.78 billion, down from the year-ago figure of $36.06 billion. Also, the top line lagged the Zacks Consensus Estimate of $20.48 billion.
General Motors cash and cash equivalents of $28.2 billion as of Jun 30, 2020 compared with $19.1 billion as of Dec 31, 2019. The company recorded negative adjusted automotive free cash flow (FCF) of $9 billion in second-quarter 2020, as against a positive FCF of $2.5 billion witnessed in the prior-year period.
On Aug 5, Honda Motor Co., Ltd. (HMC - Free Report) incurred a loss of 44 cents per ADR in first-quarter fiscal 2021, much narrower than the Zacks Consensus Estimate of loss of 70 cents. The company had reported earnings of 89 cents per share in the year-ago quarter. However, the company reported revenues of $19.75 billion, missing the Zacks Consensus Estimate of $20.11 billion and declining 45.7% from the prior-year sales.
Consolidated cash and cash equivalents were ¥2.61 trillion ($24.2 billion) as of Jun 30, 2021. Long-term debt was ¥4.31 trillion ($39.9 billion). For fiscal 2021, the company projects sales and operating profit of ¥12.8 trillion and ¥200 billion, respectively. Moreover, it expects earnings per share of ¥95.56 per share in the fiscal year.
On Aug 6, Toyota Motor Corporation (TM - Free Report) reported fiscal first-quarter 2021 earnings of $1.06 per share, as against the Zacks Consensus Estimate of a loss of $1.78. However, the bottom line compares unfavorably with the year-ago earnings of $4.32 a share. Consolidated revenues came in at $42.78 billion, outpacing the consensus mark of $36.52 billion. Nonetheless, the top line declined 38.5% year over year. Toyota had cash and cash equivalents of ¥6.8 trillion ($63.1 billion) as of Jun 30, 2020. Long-term debt amounted to ¥12.6 trillion ($116.6 billion). For fiscal 2021, Toyota anticipates consolidated vehicle sales of 7.2 million units, suggesting a decline from the fiscal 2020 levels.
Automobile ETF in Focus
In the current scenario, it is prudent to discuss the following ETF that has a relatively higher exposure to the companies discussed.
CARZ tracks the NASDAQ OMX Global Auto Index. It comprises 34 holdings with the above-mentioned companies carrying 32.9% weight. Its AUM is $20.4 million and expense ratio, 0.70%. The fund has gained 5.4% since Jul 22 (as of Aug 14) (read: ETF Laggards are Emerging Leaders: Here's Why).
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Will CARZ ETF Gain Despite Mixed Auto Earnings?
The coronavirus pandemic affected production and sales of vehicles as carmakers had to shut down facilities in late March across the United States. The outbreak also slowed down the sector’s sales with demand being hit hard. However, with many states having eased restrictions, automakers have restarted their operations but under some restrictions for controlling the spread of infections.
Against this backdrop, we take a look at some big automobile earnings releases and see if these can impact ETFs exposed to the space.
Earnings in Focus
On Jul 22, Tesla (TSLA - Free Report) reported earnings per share of $2.18 for second-quarter 2020. The Zacks Consensus Estimate was of a loss of 49 cents per share. This outperformance came in from higher-than-expected revenues, which totaled $6.04 billion, beating the consensus mark of $4.96 billion. While the bottom line improved significantly from the prior-year quarter’s loss of $1.12 per share, the top line recorded a decline of 5%. During the second quarter, Tesla reported delivery and production of 90,891 and 82,272 vehicles, respectively, reflecting a year-over-year decrease of 5% for both metrics.
Tesla had cash and cash equivalents of $8.62 billion as of Jun 30, 2020 compared with $8.08 billion on Mar 31, 2020. Tesla maintains the target of exceeding 500,000 vehicle deliveries despite the recent production interruptions. However, amid coronavirus-related setbacks, Tesla refrained from providing any profit or cash flow forecast.
On Jul 30, Ford Motor Company (F - Free Report) reported second-quarter 2020 adjusted loss per share of 35 cents, narrower than the Zacks Consensus Estimate of a loss of $1.25. However, in the prior-year quarter adjusted earnings had come in at 32 cents per share. This year-over-year deterioration can be attributed to lower automotive sales across all markets served. The company’s second-quarter sales were affected by depressed demand for vehicles, largely due to the coronavirus outbreak.
For the June quarter, the company reported an adjusted negative EBIT of $1.9 billion, as against a profit of $1.7 billion recorded in the corresponding period of 2019. The U.S. auto giant reported net profit of $1.1 billion. Ford had had cash and cash equivalents of $30.9 billion as of Jun 30, 2020 compared with $17.5 billion on Dec 31, 2019.
During the reported quarter, Ford reported revenues of $19.37 billion, outpacing the Zacks Consensus Estimate of $14.98 billion. In the prior-year quarter, the figure was $38.85 billion.
On Jul 29, General Motors Company (GM - Free Report) reported an adjusted loss of 50 cents per share in second-quarter 2020, narrower than the Zacks Consensus Estimate of a loss of $1.72. In the year-ago quarter, the company had recorded earnings of $1.64 per share. The company reported revenues of $16.78 billion, down from the year-ago figure of $36.06 billion. Also, the top line lagged the Zacks Consensus Estimate of $20.48 billion.
General Motors cash and cash equivalents of $28.2 billion as of Jun 30, 2020 compared with $19.1 billion as of Dec 31, 2019. The company recorded negative adjusted automotive free cash flow (FCF) of $9 billion in second-quarter 2020, as against a positive FCF of $2.5 billion witnessed in the prior-year period.
On Aug 5, Honda Motor Co., Ltd. (HMC - Free Report) incurred a loss of 44 cents per ADR in first-quarter fiscal 2021, much narrower than the Zacks Consensus Estimate of loss of 70 cents. The company had reported earnings of 89 cents per share in the year-ago quarter. However, the company reported revenues of $19.75 billion, missing the Zacks Consensus Estimate of $20.11 billion and declining 45.7% from the prior-year sales.
Consolidated cash and cash equivalents were ¥2.61 trillion ($24.2 billion) as of Jun 30, 2021. Long-term debt was ¥4.31 trillion ($39.9 billion). For fiscal 2021, the company projects sales and operating profit of ¥12.8 trillion and ¥200 billion, respectively. Moreover, it expects earnings per share of ¥95.56 per share in the fiscal year.
On Aug 6, Toyota Motor Corporation (TM - Free Report) reported fiscal first-quarter 2021 earnings of $1.06 per share, as against the Zacks Consensus Estimate of a loss of $1.78. However, the bottom line compares unfavorably with the year-ago earnings of $4.32 a share. Consolidated revenues came in at $42.78 billion, outpacing the consensus mark of $36.52 billion. Nonetheless, the top line declined 38.5% year over year. Toyota had cash and cash equivalents of ¥6.8 trillion ($63.1 billion) as of Jun 30, 2020. Long-term debt amounted to ¥12.6 trillion ($116.6 billion). For fiscal 2021, Toyota anticipates consolidated vehicle sales of 7.2 million units, suggesting a decline from the fiscal 2020 levels.
Automobile ETF in Focus
In the current scenario, it is prudent to discuss the following ETF that has a relatively higher exposure to the companies discussed.
Second Trust NASDAQ Global Auto ETF (CARZ - Free Report)
CARZ tracks the NASDAQ OMX Global Auto Index. It comprises 34 holdings with the above-mentioned companies carrying 32.9% weight. Its AUM is $20.4 million and expense ratio, 0.70%. The fund has gained 5.4% since Jul 22 (as of Aug 14) (read: ETF Laggards are Emerging Leaders: Here's Why).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>