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Auto Stock Roundup: Ford, Tesla Earnings Miss, Honda Motor Revenues Up

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Majority of the auto companies have reported their earnings for the quarter ended on Jun 30, 2018. In the past week, auto biggies, including Ford Motor Co. (F - Free Report) , Autoliv, Inc. (ALV - Free Report) , Honda Motor Co., Ltd. (HMC - Free Report) , Tesla, Inc. (TSLA - Free Report) have reported second-quarter results.

Auto industry sales have been witnessing an upside in 2018. A robust job market and favorable tax measures have driven the consumer demand, which, in turn, is aiding sales. According to the latest Earnings Preview, as of Jul 27, the auto sector’s earnings are expected to decline 13.9%, while revenues are likely to gain 2.1% on a year-over-year basis. However, the S&P 500 companies are estimated to record a respective 23.6% and 8.8% year-over-year rise in earnings and revenues in the quarter under review.

In second-quarter 2018, Tesla produced 53,339 vehicles. Moreover, the company delivered 22,319 Model S and Model X vehicles, along with 18,449 Model 3 vehicles, totaling 40,768 deliveries. In the last week of June, Tesla roughly produced 7,000 Model 3, Model S and Model X vehicles. Ford reported an earnings miss in the quarter under review. Ford’s earnings miss might have been caused due to the China market-related challenges and the production disruption in North America.

(Read the previous roundup here: Auto Stock Roundup for Jul 26, 2018)

Recap of the Week’s Most Important Stories

1.    Ford reported second-quarter 2018 adjusted earnings per share of 27 cents, missing the Zacks Consensus Estimate of 31 cents per share. Adjusted earnings in the prior-year quarter were 56 cents per share. The results were impacted by challenges faced by the company in the China market and the North American production disruption.

Ford is continuing with its strategy of redesigning business models by reallocating capital to augment competitiveness and attain higher returns. Second-quarter net income was $1.1 billion, reflecting a decrease of $0.9 billion from the year-ago quarter.

During the reported quarter, Ford logged automotive revenues of $35.9 billion, down from the prior-year quarter figure of $37.1 billion. Its Zacks Consensus Estimate for revenues was $35.5 billion. (Read more: Ford Q2 Earnings Lag Estimates & Fall Y/Y, View Slashed)

Ford currently carries a Zacks Rank #5 (Strong Sell).

2.    Penske Automotive Group, Inc. (PAG - Free Report) recorded second-quarter 2018 adjusted earnings of $1.58 per share, which surpassed the Zacks Consensus Estimate of $1.42. The company recorded net earnings of $1.23 per share in the year-ago quarter.

Net income from continuing operations increased 27% year over year to $134.6 million in the reported quarter from $106.2 million a year ago.

Total revenues rose 10.3% year over year to $5.9 billion. Same-store retail unit sales increased 1.6% year over year to 126,484 units and retail unit sales went up 3.1% to 134,214. Penske Automotive’s diversified transportation service model enabled it to witness growth in the second quarter.

Gross profit increased 8.9% to $889.8 million from $817.3 million in the prior-year quarter. Operating income grew 9.7% to $188.7 million from $172 million. (Read more: Penske Automotive’s Q2 Earnings Surpass Estimates)

Penske Automotive currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3.    Autoliv reported adjusted earnings of $2.22 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $1.88. Moreover, the bottom line improved from the prior-year quarter’s figure of $1.50.

During the quarter under review, Autoliv reported net sales of $2.21 billion, reflecting an increase of 11.5% year over year. The top line missed the Zacks Consensus Estimate of $2.3 billion.
 
Quarterly organic sales grew 7.3%, with major geographic organic growth across China, India, ASEAN and South America.

Operating income from continuing operations gained 4.2% to $229 million. However, adjusted operating margin from continuing operations was 10.4% in the reported quarter, lower than the prior-year quarter’s figure of 11.1%.

On Jun 29, 2018, Autoliv completed the spin-off of its Electronics business to Veoneer, Inc. After the completion of the spin-off, the company is focused on occupant safety products. The total cost of separation in 2017 and 2018, including tax effects, amounted to roughly $105 million compared with the company’s expectation of $150 million. (Read more: Autoliv Q2 Earnings Drive Past Estimates, Rise Y/Y)

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

4.    Honda reported a consolidated profit of ¥244.3 billion in the first quarter of fiscal 2019, up 17.8% from the year-ago period.

Revenues increased 8.4% year over year to ¥4 trillion. The year-over-year increase can be attributed to higher revenues in all business operations.

Consolidated operating profit was ¥299.3 billion, reflecting an increase of 11.2% from the prior-year quarter. This improvement can be attributable to rise in profit related to changes in sales volume and model mix, and a fall in selling, general and administrative (SG&A) expenses.

For the three months ended Jun 30, 2018, revenues from the Automobile segment’s sales increased 8% to ¥2.8 trillion. During the reported quarter, unit sales increased 3% year over year to 1.31 million. The Motorcycle segment increased 9.1% to ¥554.9 billion and unit sales increased 13.9% on a year-over-year basis to 5.35 million.

In the quarter ended Jun 30, 2018, the Financial Services segment increased 9.9% to ¥590 billion. The Power Product & Other segment was up 5.6% to ¥82 billion and unit sales increased 0.8% on a year-over-year basis to 1.34 million vehicles. (Read more: Honda Reports Y/Y Improvement in Q1 Profit and Revenues)

Honda currently carries a Zacks Rank #2.

5.    Tesla incurred an adjusted loss of $3.06 per share in second-quarter 2018, wider than the Zacks Consensus Estimate of the loss of $2.78. The company reported loss of $1.33 per share in the prior-year quarter.

The reported net loss in the quarter under review was $742.7 million compared with the year-ago net loss of $401.4 million.

Revenues increased to $4 billion from $2.8 billion registered in second-quarter 2017. The figure surpassed the Zacks Consensus Estimate of $3.8 billion.

Tesla produced 53,339 vehicles in second-quarter 2018. Also, the company delivered 22,319 Model S and Model X vehicles, and 18,449 Model 3 vehicles, totaling 40,768 deliveries.

Total automotive revenues, including revenues from automotive sales and leasing, increased 47% year over year to $3.36 billion in the reported quarter. The rise was due to Model 3 deliveries.

Energy generation and storage revenues soared from $286.8 million in second-quarter 2017 to $374.4 million in the reported quarter. The rise was mainly due to considerable growth of energy-storage deployments.

Services and other revenues increased 25% year over year, primarily due to higher used-car sales.

Tesla’s second-quarter 2018 automotive gross margin was 20.6%, declining 735 basis points (bps) from second-quarter 2017.

Energy generation and storage gross margin declined 1,716 bps on a year-over-year basis to 11.8%.

Tesla currently carries a Zacks Rank #2.

Performance

Last week, all these stocks have declined except for Honda. Tesla has declined the most. Shares of Honda has risen 2.5%.

In the past six months, share prices of all these stocks declined, except for Advance Auto Parts, Inc. (AAP - Free Report) . Honda has declined the most.

CompanyLast WeekLast 6 Months
GM-1.4%-6.1%
F-5.9%-3.3%
TSLA-11.7%-9.7%
TM-0.4%-0.3%
HMC2.5%-12.2%
HOG-5.4%-8.1%
AAP-0.5%27.2%
AZO-0.6%-4.2%


What’s Next in the Auto Space?

Watch out for the usual news releases as well as earnings releases of auto companies over the next week.

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