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Auto Stock Roundup: Mixed May Sales, GM Invests in Self-Driving, FCAU Outlines EV Roadmap

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The past week witnessed automakers releasing their U.S. auto sales report for May 2018. In May, vehicle sales in the United States increased by an estimated 2%. Low unemployment and robust consumer confidence reduced the impact of rising interest rates and fuel prices, and resulted in the rise in auto sales. Robust Memorial Day weekend sales also boosted retail auto deliveries.

Automakers reported mixed US sales results for May. Ford Motor Company’s (F - Free Report) sales increased 0.7% to 242,824 units. Moreover, Fiat Chrysler Automobiles N.V.’s (FCAU - Free Report) U.S. sales climbed 11% to 214,294 units. Among the Japanese automakers, sales of Honda Motor Co., Ltd. rose 3.1% while Toyota Motor Corp. and Nissan Motor Co., Ltd. declined 1.3% and 4.1%, respectively.

Also, the week saw Navistar International Corp. (NAV - Free Report) and Thor Industries, Inc. (THO - Free Report) coming out their earnings results. While Navistar reported an earnings beat, Thor came out with an earnings miss.

(Read the previous roundup here: Auto Stock Roundup for May 31, 2018)

Recap of the Week’s Most Important Stories

1.    General Motors Co. (GM - Free Report) has announced that Tokyo, Japan-based SoftBank Group Corp will invest $2.25 billion in GM Cruise Holdings LLC, the autonomous-vehicle unit of the carmaker. This is one of the biggest investments in the self-driving car front. This investment, made through SoftBank’s $100-billion Vision Fund, will enable the auto giant to deploy self-driving vehicles in a big way.

However, General Motors views electric and autonomous vehicles as the basis of future transport. The automaker is aiming to roll out self-driving vehicles since its $1-billion acquisition of the startup, Cruise Automation, in early 2016. Presently, General Motors holds a sizable stake in Uber’s rival Lyft.

The company believes that General Motors and SoftBank Vision Fund investments are expected to provide the capital that is required for the commercialization of autonomous vehicles, starting in 2019. (Read more: General Motors’ Self-Driving Unit Gets SoftBank Funding)

General Motors currently carries a Zacks Rank #2 (Buy).

2.    Fiat Chrysler has outlined a five-year strategy to develop more electric vehicles (EVs) by investing in future technologies while boosting sales of SUVs (sports utility vehicles) and trucks, per the Associated Press. This strategy will help the company design a product portfolio that is better-suited to meet consumer demand across all markets.

Under Fiat’s plan through 2022, it will invest €9 billion ($10.5 billion) to develop electric engines and expand offerings of EVs. Also, roughly 15% of the company’s planned €45 billion spending will be used for its combustion engine technology. Fiat’s core brands that use combustion engines are Jeep SUVs, Ram pickups, and Alfa Romeo and Maserati luxury cars.

The company anticipates these brands to contribute roughly 80% of total revenues in 2022 compared with the current contribution of 65%. The company aims to double its operating profit to €16 billion ($18.71 billion) at the end of its five-year strategy.

Further, all the new models under Jeep, Maserati and Alfa Romeo brands, to be launched in the next five years, will also have some version of electrified powertrains while the truck brand, Ram will have alternative powertrain for high-end premium trucks only. (Read more: Fiat Chrysler Reveals 5-Year Plan of EV & Brand Development)

Fiat Chrysler currently carries a Zacks Rank #3 (Hold).

3.    Navistar reported second-quarter fiscal 2018 (ended Apr 30, 2018) earnings per share of 55 cents, beating the Zacks Consensus Estimate of 28 cents. In the prior-year quarter, net loss per share was 86 cents.

Navistar recorded net income of $55 million compared with the net loss of $80 million in the prior-year quarter.

Navistar’s revenues increased 16% year over year to $2.42 billion in the reported quarter. However, revenues missed the Zacks Consensus Estimate of $2.47 billion. This year-over-year improvement was primarily driven by an increase in sales volume of the company’s Class 6-8 vehicles in the United States as well as Canada. (Read more: Navistar’s Q2 Earnings Beat Estimates, Revenues Miss)

Navistar International currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

4.    Winnebago Industries, Inc. (WGO - Free Report) has announced of acquiring pleasure-boat maker Chris-Craft from the London-based private equity firm Stellican Ltd. for an unspecified amount. This acquisition is in sync with Winnebago’s strategy to diversify its portfolio in the outdoor lifestyle market. It also provides the company with a strong base for additional revenue generation.

Notably, Chris-Craft is a top brand with similarities to this Forest City, IA-based recreational vehicle (RV) manufacturer, Winnebago. Both the companies offer customers with highest-quality products and services. Winnebago’s solid brand, high-quality product line and strong position in the marine market make Chris-Craft a lucrative addition to its portfolio.

Michael Happe, the CEO of Winnebago says that he finds a significant intersection between the RV and marine lifestyles. He also considers the boat business as a natural addition to its existing outdoor recreation portfolio, with similar customer demographics and ownership crossover.

For Chris-Craft, Winnebago has turned out to be an ideal partner. This provides Chris-Craft with a chance to further develop by leveraging on Winnebago’s capital and resources. It is expected that the acquisition of Chris-Craft is going to be immediately accretive to Winnebago’s fiscal 2019 earnings per share. Moreover, Stephen Heese will continue to lead the Chris-Craft business as its President. (Read more: Winnebago acquires Chris-Craft to Diversify Portfolio)

Winnebago currently has a Zacks Rank #4 (Sell).

5.    Thor Industries reported third-quarter fiscal 2018 (ended Apr 30, 2018) adjusted earnings of $2.53 per share, missing the Zacks Consensus Estimate of $2.65. However, adjusted earnings increased almost 20% from the year-ago figure of $2.11. Net income rose to $133.8 million from $111.3 million in the prior-year quarter.

Revenues rose 11.7% year over year to $2.25 billion and outpaced the Zacks Consensus Estimate of $2.2 billion.

Gross profit increased 7.8% to $316.7 million from $294 million in third-quarter fiscal 2017. The gross profit margin decreased to 14.1% compared with 14.6% in the year-ago quarter, due to increased costs, primarily associated with extended warranty expenses on certain products and slightly higher labor as well as material costs. (Read more: Thor Industries Q3 Earnings Miss Estimates, Rise Y/Y)

Thor Industries currently has a Zacks Rank #3.

Performance

Last week, all these companies recorded an increase in share prices. The maximum increase was witnessed by General Motors while AutoZone, Inc. (AZO - Free Report) recorded the least increase in the past week.

In the last six months, the maximum rise has been recorded by Advance Auto Parts, Inc. (AAP - Free Report) while Harley-Davidson, Inc. (HOG - Free Report) shares have declined the most.

CompanyLast WeekLast 6 Months
GM15.1%4.6%
F3.6%-5.1%
TSLA9.5%1.4%
TM7%9.4%
HMC2.2%-3.3%
HOG2.3%-16.1%
AAP1.6%30.1%
AZO0.4%-9.1%


What’s Next in the Auto Space?

Watch out for the usual news releases of other auto companies over the next week.

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