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Auto Stock Roundup: Thor Q4 Earnings Lag, Nissan Recalls, BorgWarner Inks EV Deal

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Last week saw the continuation of the trade spat between the United States and China, adding to the worries of auto companies. Apart from trade-related tensions, cases of recalls put auto sector on low gear. Per the Associated Press, Japanese auto giant Nissan Motor Company (NSANY - Free Report) recalled around 240,000 vehicles from all over the world. The faulty vehicles include cars and sport utility vehicles (SUVs) that have chances of catching fire.

Further, Thor Industries, Inc. (THO - Free Report) reported fourth-quarter fiscal 2018 (ended Jul 31, 2018) results. This recreational vehicle (RV) manufacturer reported adjusted earnings of $1.67 per share, missing the Zacks Consensus Estimate of $1.93. Moreover, adjusted earnings decreased roughly 26% from the year-ago $2.26. However, during the reported quarter, revenues surpassed estimates, though it was lower than the prior-year quarter’s figure.

Again, in a major development, BorgWarner Inc. (BWA - Free Report) reached a three-year agreement with auto manufacturer WM Motor based in China. The companies collaborated to contribute to the development of electric vehicles (EVs) in China.

(Read the previous roundup here: Auto Stock Roundup for Sep 20, 2018)

Recap of the Week’s Most Important Stories

1.    Thor reported fourth-quarter fiscal 2018 (ended Jul 31, 2018) adjusted earnings of $1.67 per share, missing the Zacks Consensus Estimate of $1.93. Moreover, adjusted earnings decreased roughly 26% from the year-ago figure of $2.26. Net income declined to $88.2 million from $119.5 million in the prior-year quarter.

For fiscal 2018, adjusted earnings per share increased year over year from $7.09 to $8.14.

During the reported quarter, revenues fell 3.1% year over year to $1.87 billion. However, the figure outpaced the Zacks Consensus Estimate of $1.8 billion.

For fiscal 2018, revenues rose to $8.33 billion from the last fiscal’s $7.25 billion.

Gross profit decreased 18.9% to $244.4 million from $301.3 million in fourth-quarter fiscal 2018. Moreover, gross profit margin declined to 13% from 15.6% in the year-ago quarter.

The company’s actions for managing its input factors enabled it to overcome year-over-year rise in labor and warranty-related costs along with inflationary price increases in certain raw material and commodity-based components.

Thor’s quarterly results reflect actions taken to balance dealers’ inventory levels. The company’s reduced production levels, along with increased promotional costs and solid retail demand, have enhanced its dealers’ inventory at the start of the new fiscal. (Read more: Thor Earnings Miss Estimates in Q4, Revenues Beat)

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

2.    Genuine Parts Company (GPC - Free Report) announced that it is acquiring companies for its two groups. One of the acquisitions is for its Industrial Parts Group that operates under the name Motion Industries, while the other is for its U.S. Automotive Parts Group.

Genuine Parts’ Motions Industries has signed an agreement to acquire Sunrise, FL-based Hydraulic Supply Company (“HSC”). Established in 1947, HSC is a leading distributor of hydraulic, pneumatic, and industrial components and systems. Currently, HSC is present in 30 locations in the southeastern United States and is expected to generate $85 million of annual revenues.

Genuine Parts inked a deal to acquire Detroit, MI-based Hastings Auto Parts, Inc. Founded in 1981, Hastings will add four stores to the company’s distribution channel and will enable Genuine Parts to expand presence in the Detroit market. Hastings is anticipated to make approximately $10 million in annual revenues.

Per president and CEO of Genuine Parts, HSC’s experience in the fluid power industry will enhance Motion's footprint for fluid power product growth. Further, Hastings’ addition will aid Genuine Parts’ U.S. automotive business to develop store footprint and to compete in the Detroit market. Effective closing date for both the acquisitions is Oct 1, 2018. (Read more: Genuine Parts' Two Groups to Expand Through Acquisitions)

Genuine Parts currently carries a Zacks Rank # 3 (Hold).

3.    Per AP, Nissan has recalled nearly 240,000 vehicles, globally. The recalled vehicles include cars and sport utility vehicles (SUVs) that have chances of catching fire.

Per Nissan, the anti-lock brake pump — consisting of brake fluid — can leak onto circuit board, which may result in electrical short and fire. The brake fluid leakage is due to defective seals in the anti-lock brake pump. The company has advised customers not to drive the vehicle if anti-lock brake warning lamp stays on for more than 10 seconds after starting the engine. Further, Nissan asked customers to park vehicles outdoor and away from other vehicles or structures.

The recall comprises of certain Nissan Pathfinder from 2017 through 2018, 2017 Infiniti QX60, Nissan Maxima of model year 2016 and 2017, and 2015 to 2017 Nissan Murano. The company is estimating that roughly 56% of vehicles might be at risk of catching fire. In 2016, a few Murano vehicles were recalled for the same reason. Majority of the recalled vehicles are from the United States, Canada and Mexico. (Read more: Nissan Recalls 240K Vehicles Due to Risk of Catching Fire)

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

4.    Cummins Inc. (CMI - Free Report) announced that it signed a Memorandum of Understanding (MOU) with KAMAZ PTC, a Russian manufacturer of industrial and commercial vehicles. Per the agreement, Cummins will develop electrified power solutions for KAMAZ’s new line of battery-powered vehicles.

Cummins will develop and supply high-voltage fully-electric powertrain prototypes, along with applications, for KAMAZ’s buses and medium-range delivery trucks. Additionally, Cummins will design hybrid transmission prototype for KAMAZ’s heavy-duty trucks. KAMAZ’s proven electrified portfolio of vehicles will aid Cummins in offering electrified power solutions to customers.

The supplied prototypes will be tested on KAMAZ’s city buses, medium-range delivery trucks and heavy-duty trucks. After completion of the test and certification, the companies will look at the potential market size and express viewpoint for further collaboration.

This new partnership is in sync with Cummins’ recent launches. The company showcased its PowerDrive system, an advanced set of plug-in hybrid electric powertrain solutions for light, medium and heavy-duty applications. The new system will add to its diverse portfolio, consisting low emissions and fuel-efficient power solutions. (Read more: Cummins to Offer Electrified Solutions for KAMAZ's Vehicles)

Cummins currently carries a Zacks Rank #2.

5.    BorgWarner entered into a three-year agreement with WM Motor, an auto manufacturer in China. The companies will collaborate to set up transportation model for smart city. Per the agreement, BorgWarner will provide its entire range of electric propulsion technologies and efficient electrical application systems, including high-performance electric drive modules (eDM).

Per management, its collaboration with one of the emerging players of China  in the auto market will aid BorgWarner to discover business opportunities in the EV industry. The companies will add to the development of the EV industry, with their electrical systems and high-performance electric power products. This marks a major step for BorgWarner’s growth in China’s EV market.

However, the parties previously collaborated for WM Motor’s first model EX5. Introduced in April, EX5 is a first fully electric sports utility vehicle offered with interactive experience. For the first model of its kind in the EV industry, BorgWarner provided its high-performance eDM. (Read more: BorgWarner and WM Motors Tie Up to Aid EV Industry)

BorgWarner currently carries a Zacks Rank #3.

Performance

Last week, shares of Tesla, Inc. (TSLA - Free Report) gained the maximum whereas General Motors Company (GM - Free Report) declined the most.

In the past six months, Advance Auto Parts, Inc. (AAP - Free Report) increased the most, wherein Ford Motor Company (F - Free Report) declined the most.

CompanyLast WeekLast 6 Months
GM-5.6%-4.9%
F-5.2%-14.6%
TSLA3.5%20.1%
TM-0.1%-3.3%
HMC0.1%-12%
HOG-0.8%5.1%
AAP-0.2%46%
AZO3.1%22.1%


What’s Next in the Auto Space?

Watch out for the usual news releases over the next week.

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