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Auto Stock Roundup: Earnings Nearing End, Honda to Recall, Harley Seeks Partner

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Earnings season for the auto companies is nearing the end. The past week witnessed some important auto companies such as AutoNation Inc. (AN - Free Report) , Toyota Motor Corporation (TM - Free Report) , Cooper-Standard Holdings Inc. (CPS - Free Report) , American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) , Cooper Tire & Rubber Co. (CTB - Free Report) reporting their numbers for the quarter ending Jun 30. While AutoNation, American Axle and Cooper Tire have reported an earnings beat, Cooper-Standard registered an earnings miss.

The week also saw Honda Motor Co., Ltd. (HMC - Free Report) announcing that it will recall 96,900 Avancier models in China due to a cold-climate engine issue. Moreover, the company is checking whether the same fault has affected its other two models — UR-V crossover SUV and Honda Jade. If the company gets confirmation regarding the same fault, it is going to announce actions to deal with the issue.

In another development, Harley-Davidson, Inc. (HOG - Free Report) has made the announcement that it is searching for a partner to manufacture lightweight motorcycles for customers in India and other Asian markets. This is in line with its strategy to introduce a 250cc to 500cc motorcycle in India and boost sales in the world’s largest two-wheeler market.

(Read the previous roundup here: Auto Stock Roundup for Aug 2, 2018)

Recap of this Week’s Most Important Stories

1.    AutoNation reported adjusted earnings of $1.14 per share in second-quarter 2018, surpassing the Zacks Consensus Estimate of $1.13. Excluding the after-tax non-cash franchise rights impairment charge of $6 million, earnings were $1.07 per share. In the year-ago quarter, the bottom line was 86 cents.

Net income from continuing operations was $97.6 million compared with $87.7 million in second-quarter 2017.

During the quarter under review, AutoNation reported revenues of $5.39 billion, rising 2% year over year. However, the top line missed the Zacks Consensus Estimate of $5.41 billion.

During the reported quarter, new-vehicle revenues increased 0.6% year over year to $2.9 billion in second-quarter 2018. Used-vehicle revenues rose 8.1% year over year to $1.3 billion. Parts and service business revenues were $857 million, almost in line with the prior-year quarter. Net revenues from finance and insurance business were $248 million, reflecting an 8.3% increase. (Read more: AutoNation Q2 Earnings Beat Estimates, Revenues Miss)

AutoNation currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    Toyota’s operating income has risen 19% year over year to ¥682.6 billion ($6.3 billion) in first-quarter fiscal 2019 (ended Jun 30, 2018). Moreover, net income has gained 7.2% year over year to ¥657.3 billion ($6 billion).

The company’s net revenues increased 4.5% year over year to ¥7.36 trillion ($67.5 billion) in first-quarter fiscal 2019. The Zacks Consensus Estimate was $65.87 billion.

The Automotive segment’s net revenues rose to ¥6.6 trillion ($60.6 billion) in first-quarter fiscal 2019 in comparison with ¥6.4 trillion ($57.5 billion) in the prior-year quarter while operating income increased to ¥602.5 billion ($5.5 billion) from the year-ago figure of ¥489.3 billion ($4.4 billion).

The Financial Services segment’s net revenues rose to ¥516.8 billion ($4.7 billion) in the quarter under review as compared with ¥503.7 billion ($4.5 billion) in the prior-year period while operating income declined to ¥73.5 billion ($674 million) from the year-earlier figure of ¥75.3 billion ($678 million).

All Other businesses’ net segmental revenues rose to ¥358 billion ($3.3 billion) in the quarter under discussion compared with ¥338 billion ($3 billion) last year. Operating income increased to ¥13.6 billion ($125 million) from the year-ago tally of ¥11.4 billion ($103 million). (Read more: Toyota's Operating Income and Revenues Improve Y/Y in Q1)

Toyota currently carries a Zacks Rank #3.

3.    Cooper-Standard has reported second-quarter 2018 adjusted earnings per share of $2.74, missing the Zacks Consensus Estimate of $3. However, the bottom-line figure was higher than the year-ago quarter figure of $2.60 per share. This year-over-year rise can be attributed to rise in operating efficiency and decline in selling, general, administrative and engineering (SGA&E) expenses, which were partly offset by customer price reductions, unfavorable volume and mix, and high material costs.

Revenues increased 2.1% year over year to $928.3 million. The rise in sales is primarily owing to favorable exchange rate fluctuations, along with favorable volume and mix, and net of customer price reductions.

During the reported quarter, adjusted net income was $50.3 million, up from the prior-year quarter figure of $49 million. The company has launched 51 customer programs and grabbed net new business awards, totaling $144 million. Adjusted EBITDA declined 5.2% to $107.9 million compared with the second quarter of 2017. (Read more: Cooper-Standard Q2 Earnings Miss Estimates, Up Y/Y)

Cooper-Standard currently carries a Zacks Rank #3.

4.    American Axle reported second-quarter 2018 adjusted earnings of $1.23 per share, 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’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. (Read more: American Axle Q2 Earnings Beat Estimates, Gain Y/Y)

American Axle currently carries a Zacks Rank #3.

5.    Cooper Tire has posted earnings of 30 cents per share in the second quarter of 2018, beating the Zacks Consensus Estimate of 24 cents. However, the bottom line was lower than the prior-year quarter’s figure of 85 cents per share.

Cooper Tire recorded net sales of $698 million, beating the Zacks Consensus Estimate of $675.4 million. The year-ago quarter’s net sales were $721 million.

Operating profit was $33 million in the second quarter of 2018, down 61.1% from the year-ago quarter.

Americas Tire Operations registered 5% decrease in net sales to $584 million. Operating profit in this segment declined 55.5% to $40 million while operating margin decreased from 14.8% to 6.9%.

International Tire Operations registered 10.9% rise in revenues to $168 million. Operating profit was $6 million, increasing from $3 million in the year-ago quarter. Operating margin rose to 3.4% from 1.8% in the year-ago quarter. (Read more: Cooper Tire Earnings Beat Estimates in Q2, Down Y/Y)

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

Performance

Last week, all these stocks rose except for Toyota. Tesla, Inc. has gained the most.

In the past six months, Advance Auto Parts has increased the most. The maximum decline has been witnessed by Honda.

CompanyLast WeekLast 6 Months
GM1.4%-10.4%
F1.5%-6.1%
TSLA23.1%17.3%
TM-3.4%-8.4%
HMC0.4%-12.9%
HOG2.3%-9.7%
AAP4.8%33.7%
AZO4.5%0.4%


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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