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Auto Stock Roundup: GM & JCI Beat on Earnings, CMI & TM Miss

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In the past week, some companies from the Auto sector — including Honda Motor Co., Ltd. (HMC - Free Report) , Johnson Controls International plc (JCI - Free Report) , General Motors Company (GM - Free Report) , Cummins Inc. (CMI - Free Report) and Toyota Motor Corporation (TM - Free Report) — reported quarterly results. During the quarter under review, General Motors’ earnings and revenues surpassed the Zacks Consensus Estimate. While Cummins and Toyota’s earnings missed estimates, their revenues beat the same. Johnson Controls’ earnings beat the Zacks Consensus Estimate while revenues came in line.

Recap of the Week’s Most Important Stories

1.    Honda reported operating profit of ¥170.1 billion ($1.51 billion) in the third quarter of fiscal 2019, down 40.2% from the year-ago period. Decreased sales revenues and model mix, along with a rise in selling, general and administrative expenses, led to the slump in operating profit.

In the reported quarter, profit for the period attributable to owners of the parent decreased by 70.5% to ¥168.2 billion ($1.5 billion). Further, earnings attributable to owners of the parent were ¥95.61 per share, marking a decline from the year-ago figure of ¥318.50.

Revenues increased 0.4% year over year to ¥3.97 trillion ($35.3 billion). The rise can be attributed to higher sales revenues at motorcycle and financial services businesses, partly offset by effects of the foreign currency translation. The Zacks Consensus Estimate for Honda’s third-quarter fiscal 2019 revenues was pegged at $35.3 billion.

For the three months ended Dec 31, 2018, revenues from the Automobile segment decreased 1.5% to ¥2.85 trillion ($24.8 billion). During the reported quarter, total number of units sold increased 1.1% year over year to 0.94 million.

The Motorcycle segment’s revenues increased 3.5% to ¥499.1 billion ($4.6 billion) and the total number of units sold increased 4.3% year over year to 3.23 million.

In third-quarter fiscal 2019, the Financial Services segment’s revenues increased 7% to ¥523.6 billion ($5 billion). Revenues of the Power Product & Other segment rose 6.5% to ¥85.1 billion ($802.5 million) and consolidated unit sale increased 13% on a year-over-year basis to 1.35 million vehicles.

Consolidated cash and cash equivalents were ¥2.15 trillion ($19.4 billion) as of Dec 31, 2018, up from ¥2.07 trillion ($18.5 billion) as of Mar 31, 2018.

At the end of the first nine months of fiscal 2019, Honda’s net cash from operating activities amounted to ¥498.6 billion ($4.5 billion) compared with the year-ago figure of ¥622.6 billion ($5.6 billion). The decline in the number was due to increased expenses for parts and raw materials, partly offset by cash received from customers. (Read more: Honda Operating Profit Decreases Roughly 40% Y/Y in Q3)

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

2.    Johnson Controls reported adjusted earnings of 26 cents per share in first-quarter fiscal 2019, surpassing the Zacks Consensus Estimate of 24 cents. Adjusted for non-recurring items, earnings in first-quarter fiscal 2018 were 54 cents. The reported quarter witnessed solid organic revenue growth, with sustained momentum in orders and backlogs.

During the quarter under review, Johnson Controls reported revenues of $5.5 billion, almost in line with the Zacks Consensus Estimate. In the quarter under review, the cost of sales increased to $3.74 billion from $3.61 billion in the year-ago quarter. Gross profit rose to $1.73 billion from $1.70 billion in the year-ago quarter.

Selling, general and administrative expenses in the fiscal first quarter totaled $1.44 billion, up from the prior-year quarter figure of $1.32 billion.

The Building Solutions North America segment’s adjusted revenues were $2.13 billion, increasing from the year-ago quarter’s $2 billion. The segment’s EBITA increased to $253 million from $236 million in first-quarter fiscal 2018.

The Building Solutions Europe, Middle East, Africa/Latin America segment's adjusted revenues declined to $907 million from $915 million a year ago. Segment’s EBITA was $77 million, up from the first-quarter fiscal 2018 level of $711 million.

The Building Solutions Asia Pacific segment's adjusted revenues rose to $613 million from $597 million a year ago. Segment’s EBITA was $66 million, down from the first-quarter fiscal 2018 level of $74 million.

Global Products' adjusted revenues rose to $1.83 billion from $1.78 billion a year ago. Segment’s EBITA was $194 million, up from the first-quarter fiscal 2018 level of $178 million. (Read more: Johnson Controls Q1 Earnings Beat, Revenues In Line)

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

3.    General Motors reported adjusted earnings of $1.43 per share in fourth-quarter 2018, down 13.3% from the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $1.21. The company’s GM North America segment witnessed robust performance in the quarter, driven by a rich vehicle mix and strong pricing for its all-new full-size pickup trucks.

General Motors reported revenues of $38.4 billion, up 1.8% from the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $37 billion.

During the reported quarter, total sales for the wholesale unit decreased to 1.21 million from 1.24 million in the fourth quarter of 2017. Worldwide retail unit sales decreased to 2.24 million from 2.59 million in the year-ago quarter.
This automaker’s global market share was 9.4% during the reported quarter, reflecting a decline from 10.2% in the year-ago quarter.

In 2018, General Motors reported adjusted earnings of $6.54 per share, down 1.2% from the 2017 figure.

The company reported revenues of $147 billion in 2018, up 1% from the 2017 figure.

GM North America generated net sales and revenues of $29.8 billion during the fourth quarter of 2018, up from $28.8 billion recorded in fourth-quarter 2017.

GM International’s net sales and revenues were $5 billion, declining from $5.7 billion in the year-ago quarter.

GM Financial generated net sales and revenues of $3.6 billion during the quarter under review, reflecting an increase from $3.3 billion recorded in the year-ago quarter. (Read more: General Motors Q4 Earnings & Revenues Beat Estimates)

General Motors currently carries a Zacks Rank #2.

4.    Cummins reported adjusted earnings of $3.48 per share in fourth-quarter 2018, missing the Zacks Consensus Estimate of $3.82. In the year-ago quarter, it recorded adjusted earnings per share of $3.03.

During the reported quarter, net income attributable to Cummins was $579 million against net loss of $274 million in the prior-year quarter.

Revenues improved 12% year over year to $6.13 billion in the reported quarter. The top line surpassed the Zacks Consensus Estimate of $6.09 billion. The year-over-year rise was owing to increased truck production in North America, and strong demand for construction and power generation equipment across all markets.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $896 million (14.6% of sales) from $769 million (14% of sales) recorded in the prior-year quarter.

In 2018, Cummins reported net income of $2.1 billion or $13.15 per share, up from $999 million or $5.97 per share in the previous year.

Revenues for the year went up 16% year over year to $23.8 billion.

Sales at the Engine segment grew 18% to $2.7 billion on the back of 17% increase in on-highway revenues and 21% in off-highway revenues. The segment’s EBITDA increased to $393 million (14.6% of sales) from $271 million (11.8% of sales) a year ago.

Sales at the Distribution segment increased 6% to $2.1 billion. Revenues benefited from 6% rise in the North American segment and 5% growth in international markets. The segment’s EBITDA rose to $140 million (6.8% of sales) from $123 million (6.3% of sales) a year ago.

Sales at the Components segment surged 14% to $1.8 billion, owing to revenue growth of 23% in North America in addition to 3% increase in international sales. The segment’s EBITDA was $278 million (15.7% of sales) compared with the year-ago figure of $214 million (13.7% of sales).

Sales at the Power Generation segment improved 9% to $1.2 billion, banking on a 13% increase in power generation revenues. The segment’s EBITDA rose to $123 million (10.3% of sales) in fourth-quarter 2018 from $125 million (11.3% of sales) in the year-ago quarter.

Sales at the Electrified Power segment were $2 million while the segment witnessed EBITDA loss of $29 million.

Cummins’ cash and cash equivalents were $1.3 billion as of Dec 31, 2018, compared with $1.37 billion as of Dec 31, 2017. Long-term debt totaled $1.6 billion as of Dec 31, 2018, almost similar to the figure recorded as of Dec 31, 2017.

At the end of 2018, Cummins’ net operating cash inflow was $2.4 billion compared with $2.3 billion in the same period of 2017. Capital expenditure was $709 million, marking an increase from $506 million in 2017. (Read more: Cummins Q4 Earnings Miss Estimates, Revenues Beat)

Cummins currently carries a Zacks Rank #3 (Hold).

5.    Toyota’s earnings were $1.11 per ADR in third-quarter fiscal 2019 (ended Dec 31, 2018). Earnings missed the Zacks Consensus Estimate of $2.80. This Japanese automaker reported net income of ¥180.9 billion ($1.6 billion) in the quarter under review, down from ¥942 billion ($8.3 billion) in the year-ago period.

Toyota’s total net revenues rose 3% year over year to $69.04 billion (¥7.8 trillion), which surpassed the Zacks Consensus Estimate of $68.2 billion.

In the first nine months of fiscal 2019, consolidated vehicle sales went up to 6,700,902 units, marking an increase of 22,623 units from the same period of the last fiscal year. Over the same period, this Japanese automaker witnessed a decline in vehicle sales across North America and Other regions (consisting Central and South America, Oceania, Africa, and the Middle East). However, sales in Japan, Europe and Asia rose from the year-ago period.

The Automotive segment’s net revenues rose to ¥7.02 trillion ($62.1 billion) in third-quarter fiscal 2019 from ¥6.9 trillion ($60.7 billion) in the prior-year quarter. Operating income increased to ¥581.3 billion ($5.14 billion) from the year-ago figure of ¥569 billion ($5 billion).

The Financial Services segment’s net revenues rose to ¥552.4 billion ($4.9 billion) in the quarter under review from ¥512.5 billion ($4.5 billion) in the prior-year period. The segment’s operating income was ¥ 82.6 billion ($730 million), similar to the same period of the last fiscal year.

All Other businesses’ net revenues increased to ¥391.2 billion ($3.4 billion) in the quarter under review from ¥381 billion ($3.37 billion) in the last fiscal year. However, operating income decreased to ¥13.9 billion ($123 million) from the year-ago number of ¥24.7 billion ($218.6 million).

Toyota currently carries a Zacks Rank #2.

Performance

In the last week, AutoZone, Inc. (AZO - Free Report) gained the maximum while Honda declined the most.

In the past six months, AutoZone has increased the most, whereas Harley-Davidson, Inc. (HOG - Free Report) declined the most.

CompanyLast WeekLast 6 Months
GM2.1%6%
F0.1%-13.3%
TSLA2.7%-14.3%
TM-1.6%-4.8%
HMC-8.3%-10.5%
HOG-0.2%-16.6%
AAP-1.1%7.4%
AZO3%18.4%


What’s Next in the Auto Space?

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

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