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Auto Stock Roundup: TM Earnings Beat, Ford's Mexico Production Falls

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Auto companies’ increasing preference for sports utility vehicles (SUVs) and trucks are reshaping the industry. Even concerns over high interest rates and growing oil prices could not stop Americans from splurging on SUVs and pickup trucks. This has led to strong unit sales of SUVs, crossovers and pickup trucks.

In the past week, a news regarding Ford Motor Company’s (F - Free Report) declining vehicle production in Mexico surfaced as the company planned to exit the sedan market of the United States. The rise in demand for trucks and SUVs among the customers forced Ford to take this decision.

The week also saw the Japanese auto giant Toyota Motor Corp. (TM - Free Report) reporting an earnings beat. In fact, the company recorded earnings of $3 per ADR in fourth-quarter fiscal 2018 (ended Mar 31, 2018), surpassing the Zacks Consensus Estimate of $2.61. Cost-reduction initiatives and currency fluctuations aided the company during the reported quarter.

(Read the previous roundup here: Auto Stock Roundup for May 3, 2018)

Recap of the Week’s Most Important Stories

1.    PACCAR Inc. (PCAR - Free Report) announced that its board has approved a 12% increase in the company's quarterly dividend on common stock to 28 cents per share from the earlier payout of 25 cents per share. The revised dividend will be paid on Jun 5 to shareholders of record as of May 15, 2018.

Per management, increase in dividend showcases its continuing exceptional business performance. Further, the company has been paying regular dividends since 1941 and increased the payout by 40% in past five years.

In first-quarter 2018, the company’s net income was $512 million due to increased truck deliveries in Europe and North America along with a strong performance by the aftermarket parts segment across the globe.

An excellent balance sheet and strong operating cash flow enabled PACCAR to pay regular dividends while boosting shareholder value. Earlier in December 2017, it paid an extra cash dividend of $1.2 per share to shareholders. In addition to this, the company paid its usual quarterly dividend of 25 cents on Mar 6, 2018. (Read more: PACCAR Declares 12% Hike in Quarterly Stock Dividend)

PACCAR currently carries a Zacks Rank #2 (Buy).

2.    American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) reported first-quarter 2018 adjusted earnings of 98 cents per share, beating the Zacks Consensus Estimate of 81 cents. In first-quarter 2017, adjusted earnings were $1.03.

During the quarter under review, the company reported net income of $89.4 million or 78 cents per share compared with $78.4 million or 99 cents per share in the year-ago quarter.

Revenues increased to $1.86 billion in the reported quarter from the year-ago figure of $1.05 billion. The top line also surpassed the Zacks Consensus Estimate of $1.76 billion. Realization of the new business backlog and sustained strength in end markets led to the rise in year-over-year sales.

American Axle’s SG&A (Selling, General & Administrative) expenses were $97.3 million for the reported period in comparison with $81.2 million in the prior-year quarter.

Gross profit increased to $316.3 million in first-quarter 2018 from $210.7 million in the prior-year quarter. Operating income increased to $175.8 million from $111.9 million a year ago. (Read more: American Axle's Q1 Earnings & Revenues Beat Estimates)

American Axle currently carries a Zacks Rank #3 (Hold).

3.    Toyota’s earnings were $3 per ADR in fourth-quarter fiscal 2018 (ended Mar 31, 2018). Earnings surpassed the Zacks Consensus Estimate of $2.61. The consolidated net income was ¥2.5 trillion ($22.5 billion) in fiscal 2018-end compared with ¥1.83 trillion ($16.9 billion) in the prior year. The Japanese automaker’s cost-reduction initiatives and currency fluctuations contributed to year-over-year growth.

The company’s net revenues increased 1.9% year over year to ¥7.58 trillion ($68.3 billion) in fourth-quarter fiscal 2018. The Zacks Consensus Estimate was $40.55 billion. Consolidated revenues at fiscal 2018-end rose 6% year over year to ¥29.4 trillion ($268 billion).

The Automotive segment’s net revenues rose to ¥26.4 trillion ($237.8 billion) in fiscal 2018 in comparison with ¥25.1 trillion ($232.4 billion) in fiscal 2017 while operating income increased to ¥2.01 trillion ($18.1 billion) from the year-ago figure of ¥1.7 trillion ($15.7 billion).
 
The rise in operating income was primarily due to the company’s cost-reduction initiatives and the change in exchange rates. (Read more: Toyota's Cost-Cut Initiatives Aid Q4 Earnings Beat)

Toyota currently carries a Zacks Rank #3.

4.    Per Bloomberg, Ford’s vehicle production in Mexico is declining as the company is planning to exit from the sedan market of the United States. The recent demand for trucks and sports utility vehicles (SUVs) among the customers forced Ford to take this decision.

Per data, compiled by a trade group of automakers, the company’s production at its Mexican facilities declined 31% in April, marking the lowest April production since 2009. Further, exports from Mexico witnessed a decrease, including a slump of 36% in units exported to the United States.

The slump in output from Mexican facilities is due to Ford’s strategic shift in its U.S. market. The company has been focusing more on SUVs and trucks, and is disposing of its less-selling sedan models. Out of the sedans manufactured in Mexico, Fiesta subcompact, Ford Fusion and Lincoln MKZ are already losing popularity in the United States.

Ford is frequently adjusting its production, depending on demands in the North American market, in sync with its goal to reduce inventory. Auto manufacturers consider 60 days’ supply to be an ideal-inventory level. At the beginning of May, the U.S. inventory of Ford’s Lincoln MKZ, Fiesta and Fusion were 104 days, 85 days and 74 days, respectively. (Read more: Ford's Plan to Exit Sedan Hits Mexican Vehicle Output)

Ford currently carries a Zacks Rank #3.

5.    Superior Industries International Inc.’s (SUP - Free Report) adjusted earnings of 15 cents per share for first-quarter 2018 topped the Zacks Consensus Estimate of 4 cents. Including the impact of acquisition-related items, net income was $10.3 million or 7 cents per share.

Revenues were $386.4 million in the reported quarter, beating the Zacks Consensus Estimate of $356.2 million. Also, the reported figure was higher than $174.2 million recorded in the year-ago quarter.

During the quarter under review, the company reported record wheel-unit shipments of 5.5 million compared with 2.8 million in the prior-year quarter. The rise is primarily due to the addition of its European operations and higher unit shipments in North America. Value-added sales, i.e. net sales minus pass-through charges for aluminum, increased to $207.4 million compared with $95.5 million in first-quarter 2017.

Gross profit rose to $50 million from $19.2 million in the year-ago quarter. The increase was due to strong sales performance, enhanced operational efficiency in North America and the addition of European operations.

Selling, general and administrative expenses jumped to $22.4 million in first-quarter 2018 from $15.3 million in the prior-year quarter, resulting mainly due to the addition of Superior’s European operations.

Superior Industries currently carries a Zacks Rank #3.

Performance

Last week, Toyota recorded maximum increase. The maximum decline was registered by Honda Motor Co., Ltd. (HMC - Free Report) .

In the last six months, maximum rise has been recorded by Advance Auto Parts, Inc. (AAP - Free Report) while General Motors Co.’s (GM - Free Report) shares have declined the most.

CompanyLast WeekLast 6 Months
GM0.2%-16.8%
F-1.3%-9.1%
TSLA1.9%-2.7%
TM4.7%8.5%
HMC-1.7%-0.6%
HOG-0.3%-14.4%
AAP1.8%43.4%
AZO4.5%10.6%


What’s Next in the Auto Space?

Watch out for the usual news releases of other auto companies over the next week. Also, look for earnings releases of some important auto companies in the next week.

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