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American Axle (AXL) Q3 Earnings Miss Estimates, Revenues Rise

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American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) posted adjusted earnings of 63 cents per share in the third quarter, missing the Zacks Consensus Estimate of 90 cents. In third-quarter 2017, adjusted earnings were 86 cents.
    
During the quarter under review, the company reported net income of $63.8 million or 55 cents per share compared with $86.2 million or 75 cents per share a year ago.

Revenues increased to $1.8 billion from the year-ago $1.72 billion. The top line slightly surpassed the Zacks Consensus Estimate of $1.78 billion.

American Axle’s SG&A (Selling, General & Administrative) expenses were $96.3 million for the third-quarter 2018 in comparison with $102.3 million in the prior-year quarter.

Gross profit decreased to $267.4 million in third-quarter 2018 from $297.7 million a year ago. Operating income declined to $134.6 million from $148.2 million.

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

 

Financial Position

American Axle had cash and cash equivalents of $439.4 million as of Sep 30, 2018, up from $376.8 million as of Dec 31, 2017. Net long-term debt was $3.9 billion as of Sep 30, 2018, compared with $4 billion as of Dec 31, 2017.

Cash flow from operations for the first three months of 2018 was $223.8 million in comparison with the prior-year $207.5 million. At the end of the first three months of 2018, American Axle’s adjusted free cash inflow was $121.3 million compared with an inflow of $87.8 million for the same period last year.

2018 Outlook

For 2018, the company expects sales of $7.25 billion compared with the prior expectation of $7.2-$7.25 billion.
 
American Axle anticipates adjusted earnings before income taxes, depreciation and amortization (EBITDA) margin of 16.25-16.5% compared with the previous expectation of 17.5-17.75%. Due to higher launch-related expenses and manufacturing costs in the second half of 2018, the company lowered the guidance. As a result of a drop in full-year adjusted EBITDA, the company is now targeting adjusted free cash flow of 4% 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 Allison Transmission Holdings, Inc. (ALSN - Free Report) , Advance Auto Parts, Inc. (AAP - Free Report) and AutoZone, Inc. (AZO - Free Report) . While Allison Transmission Holdings sports a Zacks Rank #1 (Strong Buy), both Advance Auto Parts and AutoZone carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have climbed 8.8%.

Advance Auto Parts has an expected long-term growth rate of 12.3%. Over the past six months, shares of the company have risen 41.4%.

AutoZone has an expected long-term growth rate of 12.2%. Over the past six months, shares of the company have risen 17%.

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