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American Axle (AXL) Stock Rallies 9.4% on Q3 Earnings Beat

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Shares of American Axle Manufacturing Holdings, Inc. (AXL - Free Report) have gained more than 9% since the third-quarter 2020 earnings announcement on Oct 30. The company delivered stellar quarterly financial results, thanks to the rebounding global production volumes and its cost-containment measures. Amid the improving scenario, management reissued the previously-suspended 2020 guidance and expects full-year sales of $4.6 billion, with adjusted EBITDA in the range of $665-$680 million. The company also anticipates adjusted free cash flow for the current year to be in the band of $220-$235 million.

American Axle posted adjusted earnings of $1.15 per share, handily beating the Zacks Consensus Estimate of earnings of 21 cents. Moreover, the reported figure comes in significantly higher than the year-ago quarter’s earnings of 58 cents per share.

The Detroit-based global automotive parts supplier generated revenues of $1,414.1 million, missing the Zacks Consensus Estimate of $1,444 million on lower-than-expected revenues from both major segments of the company.  

Revenues, moreover, slipped 15.7% from the year-ago figure of $1,677.4 million on the pandemic-led sluggish demand. Per the company, the coronavirus crisis affected sales to the tune of $87 million for the reported quarter.

Segmental Performance

For the September-end quarter, the Driveline segment recorded sales of $1,094.5 million, down 7.8% year over year. The metric also missed the Zacks Consensus Estimate of $1,133 million. Nonetheless, the segment posted adjusted EBITDA of $207.4 million, higher than the $181 million witnessed in the prior-year quarter.

The company’s Metal Forming business generated revenues of $433.2 million during the third quarter, declining 9.1% from the year-ago figure of $476.6 million. The reported figure also lagged the consensus mark of $458 million. Nonetheless, the segment witnessed an adjusted EBITDA of $89.7 million against the prior year’s income of $79.3 million.

Financial Position

American Axle’s third-quarter 2020 SG&A (selling, general & administrative) expenses totaled $66.5 million, down from the $92.7 million incurred in the prior-year period.

For the three-month period ended Sep 30, 2020, the company posted adjusted free cash flow (FCF) of $217.2 million, as against the adjusted FCF of $160.5 million recorded in the year-earlier period. Capital spending for the quarter came in at $40.5 million, down from the year-ago period’s $97.5 million.

As of Sep 30, 2020, American Axle had cash and cash equivalents of $537.3 million compared with $532 million on Dec 31, 2019. The company had net long-term debt of $3,555.4 million as of Sep 30, 2020, down from $3,612.3 million on Dec 31, 2019.

Zacks Rank & Other Stocks to Consider

American Axle currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the same sector include Autoliv Inc (ALV - Free Report) , Lear Corporation (LEA - Free Report) and Navistar International Corporation (NAV - Free Report) , all of which sport a Zacks Rank of 1, at present.

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