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What's in Store for American Axle (AXL) This Earnings Season?

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American Axle & Manufacturing Holdings (AXL - Free Report) is slated to release fourth-quarter 2020 results on Feb 12, before the bell. The Zacks Consensus Estimate for earnings is pegged at 30 cents per share on revenues of $1.36 billion for the quarter.

This automotive parts supplier registered robust earnings in the last reported quarter on higher-than-expected EBITDA across both segments of the company.

American Axle beat estimates in each of the trailing four quarters, the average surprise being 471.43%. This is depicted in the graph below:

Trend in Estimate Revisions

The Zacks Consensus Estimate for American Axle’s fourth-quarter earnings per share witnessed an upward revision of one cent to 30 cents in the past 30 days. Moreover, this compares favorably with the year-ago quarter’s earnings of 13 cents per share, indicating a whopping 130.7% growth, year on year. However, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 4.5%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for American Axle this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: American Axle has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Factors at Play

With the economy gradually recovering from the pandemic blues, auto sales across the globe have managed to rebound, underlined by the rising momentum of new vehicle sales. This is likely to have aided American Axle’s fourth-quarter sales and earnings.

Notably, the Zacks Consensus Estimate for the Driveline segment’s quarterly net sales is pegged at $1,047 million, suggesting a jump from the $1,016 million reported in the year-ago period. Moreover, the consensus estimate for EBITDA from the said segment is pinned at $148 million, indicating growth from the $125 million recorded in the prior-year quarter.  

The consensus mark for the Metal Forming segment’s quarterly net sales is pinned at $409 million, calling for an increase from the year-earlier quarter’s $401 million. Moreover, the consensus estimate for the segment’s EBITDA is pinned at $69 million, suggesting growth from the prior-year quarter’s $66 million.  

However, the company’s elevated manufacturing costs, along with surging restructuring and acquisition-related costs and research and development costs, are likely to have dented the fourth-quarter margins.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.

LKQ Corporation (LKQ - Free Report) has an Earnings ESP of +5.48% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 18.

Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release earnings results on Feb 19.

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