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SORL Auto (SORL) Surges 85% in 90 Days: What's Driving it?

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Shares of SORL Auto Parts, Inc. have soared 84.9% over the last three months. This Chinese Sino-foreign joint venture engages in development, manufacturing and supply of auto safety parts including automotive brake systems. The company has also outperformed its industry’s 1.4% gain in the same time frame.

SORL Auto has a market cap of roughly $138 million. The stock sports a Zacks Rank #1 (Strong Buy) and has an impressive VGM Score of A. VGM Score is calculated by taking into consideration the value, growth and momentum aspects of a stock. Also, the stock has seen the Zacks Consensus Estimate for current-year earnings being revised 25.4% upward over the last 60 days.

Let’s take a look at the factors driving this stock of late.

 



Driving Factors

In November, SORL Auto reported third-quarter fiscal 2017 results (ended Sep 30, 2017) wherein adjusted earnings per share came in at 44 cents, beating the Zacks Consensus Estimate of 18 cents. Similarly, the company’s quarterly revenues were $101.3 million, surpassing the consensus mark of $63.8 million.

The top line was primarily driven by increased sales, witnessed by the Commercial Vehicle Brake systems. The metric here rose by $32.8 million or 62.5% to $85.3 million compared with the same period in 2016. This segmental gain is owing to low-cost products, enabling the company to penetrate more in the commercial vehicle market.

Also, with stricter regulations set by the Chinese government to curb usage of combustion engine in order to reduce carbon emission and improve driving safety, automakers are increasingly shifting toward manufacturing products offering such new features. This by far enables SORL Auto to gain a plum market share with launch of new-age advanced products.

Third-quarter fiscal 2017 revenues for Passenger Vehicle Brake systems, the only other segment of the company, increased by $4.8 million or 42.9% to $16 million from the same period last year.

The company has a historical EPS growth rate (in the past three-five years) of approximately 18%, whereas the growth rate for the industry and the S&P 500 index are 9.77% and 6.78%, respectively.

Other Stocks to Consider

Other top-ranked stocks in the auto space include American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) , Toyota Motor Corporation (TM - Free Report) and Oshkosh Corporation (OSK - Free Report) , all sporting the same bullish Zacks Rank of 1 as SORL Auto. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Axle has an expected long-term growth rate of 8.1%. The stock has seen the Zacks Consensus Estimate for annual earnings being inched up 0.6% over the last 60 days.

Toyota has an expected long-term growth rate of 6.2%. The stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 4.3% upward over the last 60 days.

Oshkosh has an expected long-term growth rate of 16.5%. Over a month, shares of the company have risen 1.1%.

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