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American Axle (AXL) Up 22.2% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for American Axle & Manufacturing (AXL - Free Report) . Shares have added about 22.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is American Axle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

American Axle's Q4 Earnings Surpass Estimates, Rise Y/Y

American Axle posted adjusted earnings of 51 cents per share, beating the Zacks Consensus Estimate of earnings of 30 cents. Moreover, the reported figure comes in higher than the year-ago quarter’s earnings of 13 cents per share.

The Detroit-based global automotive parts supplier generated revenues of $1,437.9 million, surpassing the Zacks Consensus Estimate of $1,365 million on higher-than-anticipated revenues from both major segments of the company.  

Revenues also inched up 0.19% from the year-ago figure of $1,430 million. Per the company, the coronavirus crisis affected sales to the tune of $40 million for the reported quarter.

Segmental Performance

For the December-end quarter, the Driveline segment recorded sales of $1,105.7 million, up 8.1% year over year. The metric also outpaced the Zacks Consensus Estimate of $1,047 million. Also, the segment posted an adjusted EBITDA of $186.2 million, beating the consensus mark of $148 million and higher than the $124.9 million witnessed in the prior-year quarter.

The company’s Metal Forming business generated revenues of $433.4 million during the fourth quarter, up 8.03% from the year-ago figure of $401.2 million. The reported figure also topped the consensus mark of $409 million. Nonetheless, the segment witnessed an adjusted EBITDA of $75.3 million, exceeding the consensus mark of $69 million and higher than the prior year’s income of $66.2 million.

Financial Position

American Axle’s fourth-quarter 2020 SG&A (selling, general & administrative) expenses totaled $83.3 million, down from the $90 million incurred in the prior-year period.

For the three-month period ended Dec 31, 2020, the company posted adjusted free cash flow (FCF) of $172.7 million, as against the adjusted FCF of $116.5 million recorded in the year-earlier period. Capital spending for the quarter came in at $69.2 million, down from the year-ago period’s $95 million.

As of Dec 31, 2020, American Axle had cash and cash equivalents of $557 million compared with $532 million on Dec 31, 2019. The company had net long-term debt of $3,441.3 million as of Dec 31, 2020, down from $3,612.3 million on Dec 31, 2019.

Outlook for 2021

American Axle projects full-year 2021 revenues in the range of $5.3-$5.5 billion and adjusted EBITDA of $850-$925 million. The company expects adjusted free cash flow in the $300-$400 million band. The company’s gross new and incremental business backlog launching from 2021-2023 is estimated at approximately $600 million in future annual sales.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.


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