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Lower Production & Rising Costs Ail American Axle (AXL)

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On Aug 12, we issued an updated research report on American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) .

This Detroit, MI-based company is a leading supplier of driveline and drivetrain systems, modules, and components for the light-vehicle market.

In second-quarter 2019, American Axle’s earnings and revenues missed the Zacks Consensus Estimate and were lower than the prior-year quarter figures. It expects soft sales to affect the second half of the year as well.

Lower global production volume adversely impacted American Axle’s financials in the second quarter of 2019. For 2019, the company expects sales of $6.9-$7 billion, down from the previously mentioned $7.3-$7.4 billion. Also, its adjusted EBIDTA is now projected to be $1.05-$1.10 billion, down from the previously stated $1.2-$1.25 billion.

Higher manufacturing costs resulting from tariffs, material freight and inflationary pressures, and program launch costs affected American Axle’s profit margin on a year-over-year basis in second-quarter 2019.

However, the company’s improved operational efficiencies and program launches will likely aid it going forward. Also, new business backlogs and reduced production downtime by automakers in the second half of 2019 will further drive its financials in the year.

In the past six months, shares of American Axle have underperformed the industry it belongs to. Shares of the company have plunged 51.4% compared with the industry’s decline of 2.8%.




 

Zacks Rank & Stocks to Consider

Currently, American Axle carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space are Fox Factory Holding Corp (FOXF - Free Report) , CarMax, Inc. (KMX - Free Report) and Gentex Corporation (GNTX - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has an expected long-term growth rate of 16.7%. In the past six months, shares of the company have rallied 22.9%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have gained 36.9%.

Gentex has an expected long-term growth rate of 5%. In the past six months, shares of the company have returned 36.8%.

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