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Auto Stock Roundup: Mixed Bag Performance From General Motors & Ford, Lear Beats

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Earnings season for quarter-ended Jun 30, 2017 for the auto stocks is in full swing. Auto majors such as General Motors Company (GM - Free Report) and Ford Motor Co. (F - Free Report) have already reported their second-quarter 2017 results in the last week. While both the companies delivered positive earnings surprises, they missed the revenues estimates.

According to the latest Earnings Outlook, as of Jul 26, the earnings and revenue growth for auto companies are expected to be in the negative territory. Auto stocks are expected to register 0.4% and 4.5% year-over-year decline in earnings and revenues, respectively. However, the S&P 500 companies, as a whole, are expected to register 8.7% and 4.7% year-over-year growth in earnings and revenues, respectively.

Of late, auto companies have been encountering some serious problems. High level of inventory and frequent recalls are adversely affecting the companies.

Also, U.S. government’s plans of exiting the NAFTA treaty and implementing tariffs might negatively impact auto stocks.

(Read the previous roundup here: Auto Stock Roundup for Jul 20, 2017)

Recap of the Week’s Most Important Stories

1.    General Motors delivered adjusted earnings of $1.89 per share in second-quarter 2017, surpassing the Zacks Consensus Estimate of $1.72. Earnings increased 5.6% from $1.79 per share in the second quarter of 2016.

Revenues in the reported quarter came in at $37 billion, 1.1% lower than the year-ago quarter. Also, revenues missed the Zacks Consensus Estimate of $40.25 billion (read more: General Motors Beats on Q2 Earnings, Revenues Miss).

Currently, General Motors carries a Zacks Rank # 4 (Sell).

2.    Per Reuters, Tesla, Inc.’s (TSLA - Free Report) Model S sedan regained top rating in the vehicle class from Consumer Reports. This came after the automaker updated the emergency braking system on the vehicle.

Per the report, the automaker provided an update in July to its software on the Model S to include automatic emergency braking (AEB) at highway speeds. Notably, in April, Consumer Reports, which provides an annual rating of vehicles sold in the U.S., lowered its rating on the Model S, as it felt that Tesla’s last software update for the emergency braking system was not adequate.

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

3.    U.S. Justice Department announced that it has cancelled Harley-Davidson, Inc.’s (HOG - Free Report) penalty of $3 million, for a project to mitigate air pollution.

Last year, Harley-Davidson had agreed to a $15-million settlement with the Environmental Protection Agency related to the company’s “super tuners”, which bolstered power but released harmful emissions. Of the total amount, $12 million was to be paid as civil penalty, while $3 million had to be paid for a project to mitigate air pollution by replacing conventional woodstoves with cleaner-burning models.

Currently, Harley-Davidson has a Zacks Rank # 5 (Strong Sell).

4.    Ford posted adjusted earnings per share of 56 cents in the second quarter of 2017. The reported figure was 4 cents higher than the year-ago figure. Also, earnings surpassed the Zacks Consensus Estimate of 44 cents per share. Results were driven by lower tax rate.

Adjusted pre-tax profit was $2.5 billion, reflecting a decline of $0.5 billion from the year-ago quarter.

Second-quarter net income came in at $2 billion, increasing $0.1 billion from the year-ago quarter.

Ford logged automotive revenues of $37.1 billion, lagging the Zacks Consensus Estimate of $38 billion. Automotive revenues in the year-ago quarter were $36.9 billion (read more: Ford Drives Past Q2 Earnings Estimates, Revenues Miss).

Currently, Ford has a Zacks Rank # 5.

5.    Lear Corporation (LEA - Free Report) reported second-quarter 2017 adjusted earnings per share of $4.39, up from the prior-year quarter figure of $3.66 per share. The bottom line comfortably beat the Zacks Consensus Estimate of $4.15 per share.

Also, the reported sales came in at $5.12 billion, surpassing the Zacks Consensus Estimate of $4.89 billion. The sales figure for the prior-year quarter was $4.72 billion.

Importantly, on the basis of robust performance in the first half of the year, Lear Corporation raised its 2017 outlook.

Performance

Among these stocks, Ford recorded the maximum decline in the last one week, whereas Advance Auto Parts, Inc. (AAP - Free Report) registered the maximum increase.

In the last six months, Tesla is the only stock whose price has risen, while Advance Auto Parts recorded the steepest decline.

Company

Last 1-Week Period

Last 6 Months

GM

-2.3%

-3.8%

F

-5.3%

-11.5%

TSLA

5.7%

35.9%

TM

1.0%

-5.0%

HMC

-0.5%

-8.2%

HOG

-0.3%

-17.7%

AAP

5.8%

-35.1%

AZO

4.6%

-29.3%

What’s Next in the Auto Space?

The earnings season for the quarter ending on Jun 30, 2017 is underway. Big auto companies slated to report their earnings in the next few days include Tesla and AutoNation, Inc. (AN - Free Report) .

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