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American Axle (AXL) Q2 Earnings Beat Estimates, Gain Y/Y

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Shares of American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) have gained 6.3% in a day’s trading, following the second-quarter 2018 earnings release. The company posted adjusted earnings of $1.23 per share for the reported quarter, beating the Zacks Consensus Estimate of $1.12. In second-quarter 2017, adjusted earnings were 99 cents.

During the quarter under review, the company reported net income of $151.1 million or $1.30 per share compared with $66.2 million or 59 cents per share in the year-ago quarter.

Revenues increased to $1.9 billion in the reported quarter from the year-ago figure of $1.76 billion. The top line also surpassed the Zacks Consensus Estimate of $1.83 billion.

American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise

 

American Axle’s SG&A (Selling, General & Administrative) expenses were $95 million for the reported period in comparison with $105.6 million in the prior-year quarter.

Gross profit increased to $331.4 million in second-quarter 2018 from $316.4 million in the prior-year quarter. Operating income increased to $190.3 million from $134.3 million a year ago.

Financial Position

American Axle had cash and cash equivalents of $353.2 million as of Jun 30, 2018, down from $376.8 million as of Dec 31, 2017. Net long-term debt was $3.9 billion as of Jun 30, 2018, compared with $4 billion recorded on Dec 31, 2017.

Cash flow from operations in the first half of 2018 was $289.4 million in comparison with the prior-year figure of $213.2 million. At the end of the first half of 2018, American Axle’s adjusted free cash outflow was $ $58.6 million compared with an inflow of $202.1 million for the same period last year. The figure excluded the impact of cash payments for restructuring and acquisition-related costs, settlements of pre-existing accounts payable balances, with acquired entities and interest payments upon the settlement of acquired company debt.

2018 Outlook

For 2018, the company expects sales to be roughly $7.2-$7.25 compared with the prior expectation of $7 billion. Higher-trending metal market customer passthroughs and additional customer directed-buy content have encouraged American Axle to increase its 2018 sales target.

The company also anticipates adjusted earnings before income taxes, depreciation and amortization (EBITDA) margin to be 17.5-17.75% compared with the previous expectation of 17.5-18%. However, American Axle reaffirmed its guidance for adjusted free cash to be 5% of sales in 2018.

Zacks Rank & Key Picks

American Axle currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Honda Motor Company (HMC - Free Report) , Tesla, Inc. (TSLA - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) . Honda and Tesla presently carry a Zacks Rank #2 (Buy) while Fox Factory sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Honda has an expected long-term growth rate of 3%. Over a year, shares of the company have gained 8.8%.

Tesla has an expected long-term growth rate of 30%. Shares of the company have risen 0.9% in the past six months.

Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have gained 55.6%.

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