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Auto Stock Roundup: US Sales Fall, Tesla Posts Strong Q3 Deliveries

PAG F TSLA TM WGO HOG

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A fall in U.S. auto sales for the second month in a row brought despair for the auto sector last week, although there were several positive developments to balance the scales. Tesla Motors, Inc. (TSLA - Free Report) posted strong production and delivery figures for the third quarter, while Toyota Motor Corporation (TM - Free Report) , along with its fully owned subsidiary, Daihatsu, announced plans to establish an internal company that will cater to the compact vehicles’ sector in emerging markets.

Penske Automotive Group, Inc. (PAG - Free Report) announced the acquisition of six franchises. Further, Winnebago Industries, Inc. (WGO - Free Report) announced a planned acquisition and reported strong preliminary results.

(Read the previous roundup here: Auto Stock Roundup for Sep 29, 2016)

Recap of the Week’s Most Important Stories

1. U.S. light-vehicle sales dropped 0.7% year over year to 1.43 million units in Sep 2016, per Autodata. This is the fourth of the nine reported months this year in which sales declined. Moreover, sales on a seasonally adjusted annualized rate (“SAAR”) basis fell to 17.74 million units in the month from 18.04 million units in Sep 2015. Nevertheless, SAAR for September was higher than 16.97 million units in Aug 2016 (read more: US Auto Sales Fall in September: Will 2016 Tally Top 2015?).

2. Tesla delivered 15,800 Model S and 8,700 Model X vehicles in the third quarter of 2016. The total of 24,500 vehicles delivered during the quarter is significantly higher than 14,402 units delivered in the second quarter of 2016. Nearly 5,500 vehicles were in transit to customers at quarter end. These vehicles will be delivered in the fourth quarter.

Tesla produced 25,185 vehicles in the third quarter, representing a 37% improvement from the second quarter. The company expects to marginally increase production and delivery volume in the fourth quarter (read more: Tesla Improves Deliveries in Q3; Q4 to be Slightly Better).

Tesla currently carries a Zacks Rank #3 (Hold).

3. Toyota and Daihatsu plan to establish an internal company aimed at developing and launching competitive compact vehicles in the emerging markets where the potential for growth remains high. The new company will be responsible for all aspects of the business from product planning to preparation of production (read more: Toyota to Form Internal Company for Emerging Markets).

Currently, Toyota carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. Winnebago announced its decision to acquire privately held, towable recreation vehicles (RVs) producer, Grand Design Recreational Vehicle Company, for roughly $500 million. The deal is expected to close by the end of Winnebago’s first-quarter fiscal 2017, subject to regulatory approvals and customary closing conditions. The combined company will generate roughly $1.4 billion in pro forma revenue, in addition to enhancing growth, profit margins and earnings per share of Winnebago.

Winnebago also announced preliminary results for fourth-quarter fiscal 2016. Revenues are expected to rise 4.9% year on year to roughly $263.3 million from $251 million in the prior-year quarter. Earnings per share are projected to increase 14% year over year to 49 cents. The expected earnings also include a charge of a penny per share in relation to the impending merger with Grand Design.

Winnebago currently carries a Zacks Rank #3.

5. Penske Automotive announced the acquisition of six franchises in Bologna in northern Italy. Three of these are Porsche franchises, while the rest are Audi, Land Rover and Volvo franchises. These acquisitions are expected to augment the company’s annual revenues by $200 million.

Penske Automotive carries a Zacks Rank #4 (Sell).

Performance

The performance of auto sector companies was mixed last week. Ford Motor Co. (F - Free Report) gained the most, while Harley-Davidson, Inc. (HOG - Free Report) lost the most among the stocks listed below.

Over the long term, Toyota was the biggest gainer, while Tesla lost the maximum over this period.

Company

Last 1-Week Period

Last 6 Months

GM

+2.4%

+9.2%

F

+3.2%

-2.7%

TSLA

+1.1%

-21.5%

TM

-0.5%

+17.7%

HMC

+2.5%

+14.7%

HOG

-2.9%

+10.7%

AAP

0.0%

-6.9%

AZO

-1.0%

-3.7%

Auto-Tires-Trucks Sector Price Index

 

Auto-Tires-Trucks Sector Price Index

What’s Next in the Auto Space?

On Oct 13, 2016, Winnebago will release fourth-quarter and fiscal 2016 (ended Aug 27, 2016) financial results.

Some automakers may also report China and Europe sales figures in the coming week.

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