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Auto Stock Roundup: Q4 Earnings Snapshots of HOG, F, CMI & More

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Last week, various auto biggies released their monthly U.S. sales numbers. While U.S. auto sales of companies including Toyota, Hyundai, Kia, Subaru and Mazda witnessed an uptick amid the rising demand for vehicles, total new vehicle sales are expected to decline 3.7% in January 2021. Ford (F - Free Report) and Honda’s (HMC - Free Report) sales dipped year on year. While the Japan auto giant Honda recorded 4.3% year-over-year drop in U.S. auto sales last month, Ford’s U.S. sales declined 8.3% to 143,578 units.

Meanwhile, two S&P 500 auto firms Ford and Cummins (CMI - Free Report) reported quarterly results last week. Ford’s fourth-quarter 2020 results were quite a smasher. Not only did the U.S. auto giant post impressive earnings and revenues that beat estimates, it also announced massive investment plans in the electric and driverless market, which are set to boost its prospects and market position, going forward. Cummins also posted stellar fourth-quarter earnings and revenues that beat estimates as well as surged year over year.

Recap of the Week’s Top Stories

1. Harley-Davidson (HOG - Free Report) reported fourth-quarter adjusted loss of 63 cents per share against the Zacks Consensus Estimate of a profit of 10 cents. The bottom line also compared unfavorably with the year-ago earnings of 9 cents a share. The iconic motorcycle manufacturer generated consolidated revenues (including motorcycle sales and financial services revenues) of $725 million, down 32% from the year-earlier quarter’s $1,072 million. Revenues from the Motorcycle & Related Products unit came in at $531 million, missing the consensus mark of $789 million.

The company laid out the details of the five-year ‘Hardwire’ turnaround strategy. Hardwire’s financial goals from 2021 to 2025 include mid single-digit annual growth in revenues, and a steady improvement in the operating margin from motorcycle sales as well as double-digit growth in the Financial Services segment. The firm also targets low double-digit growth in earnings per share through 2025.

2. Cummins reported fourth-quarter 2020 earnings of $3.36 per share, surpassing the Zacks Consensus Estimate of $2.74 and rising from fourth-quarter 2019 earnings of $2.56 a share. Revenues increased 5% year over year to $5,830 million. The reported figure also beat the Zacks Consensus Estimate of $5,182 million. Cummins projects full-year 2021 revenues to increase 8-12% and EBITDA in the range of 15-15.5% of sales. The company expects revenues to increase in all regions and major markets except China. In fact, it anticipates returning 75% of operating cash flow to shareholders in the form of dividends and share repurchases in 2021.

3. Ford posted fourth-quarter 2020 adjusted earnings of 34 cents per share against the Zacks Consensus estimate of a loss of 7 cents. This marked the third straight earnings beat for the firm. Cost cut and restructuring efforts, primarily in the Europe market, led to the outperformance. Ford’s consolidated fourth-quarter revenues came in at $36 billion, down 9% year over year. Importantly, this Zacks Rank #1 (Strong Buy) company generated automotive revenues of $33.2 billion, which outpaced the Zacks Consensus Estimate of $32.9 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.

It should be noted that Ford has committed to spend $29 billion through 2025, which includes $22 billion in electric vehicles and $7 billion in autonomous vehicles. The company anticipates adjusted EBIT for 2021 between $8 billion and $9 billion, not taking into account the acute shortage of semiconductor supply. Importantly, semiconductor shortages are likely to adversely impact the firm’s 2021 adjusted EBIT forecast to the tune of $1-2.5 billion.

In a separate release, Ford announced plans to expand manufacturing operations in South Africa, for which it would spend $1.05 billion (R15.8 billion) over the coming years in the nation. Meanwhile, the auto giant also entered into a six-year partnership with Google, per which the latter will reinvent the connected vehicle experience aimed at accelerating Ford’s restructuring plan.

4. Lithia Motors (LAD - Free Report) reported fourth-quarter 2020 adjusted earnings of $5.46 per share, which beat the Zacks Consensus Estimate of $5.05. The bottom line also increased a whopping 85% from the prior-year quarter’s $2.95 per share. Total revenues rose 20.6% year over year to $3,941.8 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $3,921 million. In fact, for the reported quarter, Lithia Motors claims to have reported the highest quarterly revenues in the company's history.Quarterly dividend of 31 cents a share will be payable on Mar 26 to shareholders of record as of Mar 12, 2021. Lithia Motors had cash and cash equivalents of $160.2 million as of Dec 31, 2020. Long-term debt was $2,064.7 million, marking an increase from $1,430 million as of Dec 31, 2019.

5. CNH Industrial (CNHI - Free Report) posted fourth-quarter 2020 adjusted earnings per share of 30 cents, increasing 50% year over year and comfortably surpassing the Zacks Consensus Estimate of 15 cents. For the fourth quarter, consolidated revenues climbed 10.5% from the year-ago level to $8,501 million and topped the consensus mark of $7,659 million. The company’s net sales for industrial activities came in at $8,035 million, up 11.8% year on year. Free cash flow (FCF) from industrial activities came in at $2,365 million for the fourth quarter, up from $1,711 million recorded in the prior-year period. CNH Industrial expects net sales from industrial activities (including currency-translation effects) for 2021 to increase 8-12% year on year. The company envisions FCF from industrial activities for the ongoing year within $0.4-$0.8 billion.

Price Performance

The following table shows the price movement of some of the major auto players over the past week and the past six-month period.

In the past six months, all stocks have increased, with EV king Tesla (TSLA - Free Report) being the maximum gainer. Over the past week, all stocks have gained apart from Harley-Davidson, which plunged 16%.

What’s Next in the Auto Space?

Investors await the quarterly releases of auto biggies like General Motors, Honda, Toyota and others that are scheduled to report quarterly results during the week.

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