Back to top

Auto Stock Roundup: General Motors' Earnings Beat, Honda's Profit Rises

Read MoreHide Full Article

Within the Auto sector, a few important companies such as General Motors Company (GM - Free Report) , Penske Automotive Group, Inc. (PAG - Free Report) , Honda Motor Co., Ltd. (HMC - Free Report) , Autoliv, Inc. (ALV - Free Report) and Lear Corporation (LEA - Free Report) have released their earnings in the past week.

General Motors reported earnings and revenues beat in the quarter under review. Moreover, both earnings and revenues improved year over year. The quarter witnessed robust performance across all new full-size trucks and crossovers in North America.

During the reported quarter, Honda’s profit and revenues improved year over year. The year-over-year rise in the revenues of this Japanese automaker can be attributed to higher sales revenues at motorcycle and financial services businesses.

While Lear and Penske Automotive reported an earnings beat, Autoliv’s earnings missed the Zacks Consensus Estimate during the quarter under review. Further, on a year-over-year basis, Lear and Penske Automotive’s earnings rose while that of Autoliv declined.

Recap of the Week’s Most Important Stories

1.    In third-quarter 2018, Lear Corporation reported adjusted earnings per share of $4.09, up 3% from the prior-year quarter figure. The bottom line surpassed the Zacks Consensus Estimate of $3.92. At the end of third-quarter 2018, net income was $252.5 million compared with $295.2 million recorded in the prior-year quarter.

During the reported quarter, revenues decreased 2% year over year to $4.89 billion. The top line was almost in line with the Zacks Consensus Estimate. Tough economic conditions — leading to decline in volume, majorly in China and Europe, and fluctuations in exchange rates — resulted in this turn down in year-over-year revenues.

Moreover, the company’s core operating earnings slumped $8 million year over year to $399.2 million in the reported quarter. In third-quarter 2017, the figure was $407.5 million.

In the reported quarter, revenues at the Seating segment declined 5% year over year to $3.7 billion. The adjusted margin was 8.6% compared with 8.1% in the prior year quarter.

Revenues at the E-Systems segment rose 9% year over year to $1.2 billion. Additionally, adjusted margin was 12.1% compared with 14.4% in third-quarter 2017. (Read more: Lear Beats Q3 Earnings Estimates, Lowers 2018 Guidance)

Lear currently carries a Zacks Rank #4 (Sell).

2.    Penske Automotive recorded adjusted earnings of $1.40 per share in third-quarter 2018, which surpassed the Zacks Consensus Estimate of $1.38. It recorded net earnings of $1.10 per share in the year-ago quarter. The company’s diversified portfolio enabled it to witness this rise.

Net income from continuing operations increased 38% year over year to $130.1 million in the reported quarter from $94.2 million a year ago.

Total revenues rose 2.4% year over year to $5.66 billion, which missed the Zacks Consensus Estimate of $5.86 billion. Same-store retail unit sales decreased 0.2% year over year to 123,799 units.

Within the retail automotive segment, new-vehicle revenues declined 5.3% year over year to $2.4 billion while used-vehicle revenues gained 9.3% to $1.8 billion.

The company’s total gross profit increased 3.6% to $852.6 million from $822.6 million in the prior-year quarter. Operating income grew 7.7% to $163.9 million from $152.2 million. (Read more: Penske Automotive Q3 Earnings Beat, Revenues Lag Estimates)

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

3.    Honda reported consolidated profit of ¥210.7 billion in the second quarter of fiscal 2019, up 21.2% from the year-ago period.

Revenues increased 1.7% year over year to ¥3.8 trillion. The year-over-year increase can be attributed to higher sales revenues at motorcycle and financial services businesses.

Honda reported consolidated operating profit of ¥214.4 billion in the second quarter of fiscal 2019, up 40.2% from the year-ago period. This improvement can be attributable to rise in profit related to changes in sales volume and model mix, and the reverse effect from loss due to the settlement of multi-district class action litigation.

For the three months ended on Sep 30, 2018, revenues from the Automobile segment’s sales decreased 0.9% to ¥2.62 trillion. During the reported quarter, unit sales decreased 3.6% year over year to 1.25 million. The Motorcycle segment increased 5.7% to ¥539.3 billion and the segment’s unit sales increased 1.5% on a year-over-year basis to 5.32 million.

In the quarter ended on Sep 30, 2018, the Financial Services segment increased 11.4% to ¥5996.1 billion. The Power Product & Other segment was down 1.6% to ¥81.7 billion and the segment’s unit sales increased 0.3% on a year-over-year basis to 1.26 million vehicles. (Read more: Honda Reports Y/Y Improvement in Q2 Profit & Revenues)

Honda currently carries a Zacks Rank #3.

4.    Autoliv reported adjusted earnings of $1.35 per share in third-quarter 2018, missing the Zacks Consensus Estimate of $1.58. Moreover, the bottom line declined from the prior-year quarter’s tally of $1.47.

During the quarter under review, Autoliv reported net sales from continuing operations of $2.03 billion, reflecting 4.1% year-over-year rise. The Zacks Consensus Estimate for the same was pegged at $2.07 billion. Quarterly organic sales grew 6.4%, majorly driven by organic sales increase of 22% in the Americas. However, this uptrend was partly offset by weak demand for light-vehicle production in China and Europe.

Operating income from continuing operations gained 15.1% to $193 million. Adjusted operating margin from continuing operations was 9.5% in the reported quarter, higher than the prior-year quarter’s figure of 8.6%.

Autoliv had cash and cash equivalents of $534 million as of Sep 30, 2018, lower than $958 million reported as of Sep 30, 2017. Long-term debt was $1.68 billion as of Sep 30, 2018, witnessing an increase from $1.31 billion as of Sep 30, 2017.

At the end of third-quarter 2018, the company’s operating cash flow increased to $238 million from the year-ago figure of $218 million. Net capital expenditure decreased to $117 million from the year-ago figure of $142 million. (Read more: Autoliv Q3 Earnings Miss Estimates, 2018 View Cut)

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

5.    General Motors reported third-quarter 2018 adjusted earnings per share of $1.87, up 41.7% from the prior-year quarter. The bottom line also surpassed the Zacks Consensus Estimate of $1.26. The quarter witnessed robust performance across all new full-size trucks and crossovers in North America.

General Motors reported revenues of $35.8 billion, up 6.4% from the year-ago quarter figure. Further, revenues surpassed the Zacks Consensus Estimate of $34.2 billion.

During the last reported quarter, total sales for the wholesale unit increased to 1.13 million from 1.08 million in the third quarter of 2017. Worldwide retail unit sales decreased to 1.98 million from 2.32 million in the year-ago quarter. This automaker’s global market share was 8.6% during the reported quarter, reflecting a decline from 10% in the year-ago quarter.

GM North America (“GMNA”) generated net sales and revenues of $27.7 billion during the third quarter of 2018, up from $24.8 billion recorded in third-quarter 2017.

GM International’s (“GMI”) net sales and revenues were $4.6 billion, declining from $5.6 billion in the year-ago quarter.

GM Financial generated net sales and revenues of $3.5 billion during the quarter under review, reflecting an increase from $3.2 billion recorded in the year-ago quarter. (Read more: General Motors Q3 Earnings & Revenues Beat Estimates)

General Motors currently carries a Zacks Rank #3.

Performance

In the last week, all these stocks gained. Maximum gain was witnessed by Tesla, Inc. (TSLA - Free Report) .

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

CompanyLast WeekLast 6 Months
GM19.7%1.1%
F16.7%-14.8%
TSLA16.9%12%
TM2.2%-10.1%
HMC9.4%-14.1%
HOG1.3%-5%
AAP0.4%37.8%
AZO0.7%16.4%


What’s Next in the Auto Space?

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

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>



More from Zacks Analyst Blog

You May Like