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Auto Stock Roundup: TSLA Q1 Deliveries, KMX Earnings & Other Updates

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Things are worsening for the auto sector amid the COVID-19 pandemic. Last week, various auto giants unveiled first-quarter 2020 sales reports. Sagging showroom traffic in March resulted in a drastic decline in U.S. vehicle sales in the first quarter. This underscores how rapidly the coronavirus rampage has dealt a major blow to one of the largest industries of the nation.

More and more companies are halting operations and scrapping their 2020 outlook. As coronavirus concerns have dimmed earnings and sales prospects, carmakers are resorting to cost-containment initiatives and are drawing down their credit lines to preserve cash.  

(Read the Last Auto Stock Roundup here)

Recap of the Week’s Most Important Stories

1. Despite coronavirus crisis, Tesla (TSLA - Free Report) managed to keep up its global deliveries, which is certainly commendable. The EV maker registered production and deliveries of 102,672 and 88,400 vehicles, respectively, in the first quarter of 2020, marking a year-over-year jump of 56.5% and 40.3%. Notably, this is the company’s best ever first-quarter performance. The company’s Model S/X division recorded production and delivery volume of 15,390 and 12,200 vehicles, respectively in the quarter. The Model 3/Y division registered production of 87,282 vehicles, while 76,200 vehicles were delivered. Tesla carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Autoliv, Inc. (ALV - Free Report) canceled its quarterly dividend scheduled for Jun 4 and suspended future payouts until further notice. It also withdrew its 2020 guidance to preserve cash as vehicle sales are dropping due to the coronavirus outbreak. The company drew the remaining $600 million from the revolving credit facility of $1 billion. Notably, it had already drawn down $500 million on Mar 19. The company’s current cash balance is $1.4 billion, which would be used to deal with the downturn caused by shutdowns in production due to the pandemic-led crisis.

3. CarMax Inc. (KMX - Free Report) put up a stellar show in fourth-quarter fiscal 2020 (ended Feb 29, 2020). The leading retailer of used vehicles posted net earnings per share of $1.30, beating the Zacks Consensus Estimate of $1.12. The bottom line also compared favorably with a profit of $1.13 per share reported in the year-ago quarter.Net sales and operating revenues in the reported quarter increased 14.9% year over year to $4.96 billion. The top line also beat the Zacks Consensus Estimate of $4.66 billion. Total gross profit rose 12.3% year over year to $672.9 million.

4. CNH Industrial N.V. (CNHI - Free Report) suspended majority of its manufacturing operations in North and South America for a two-week period, starting Mar 30, on account of the coronavirus outbreak. The firm also withdrew its 2020 guidance amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainty. CNH Industrial is also evaluating necessary initiatives to slash costs and preserve financial flexibility in the face of rising market uncertainty due to the coronavirus crisis.

5. Penske Automotive Group, Inc. (PAG - Free Report) announced that it is implementing a number of actions to boost the firm’s cash position in the face of rising uncertainty due to the coronavirus crisis. The company has enforced a variety of measures, including a company-wide hiring freeze, substantial cost cuts, staffing-level adjustments, postponement of $150 million in capex and negotiated rent deferrals at different locations for up to 90 days, to counter the pandemic-led crisis.

6. AutoNation, Inc. (AN - Free Report) announced that the company is furloughing 7,000 employees, slashing executive pay and imposing a hiring freeze, mainly due to the coronavirus pandemic which resulted in a significant plunge in new and used vehicle unit sales including a year-over-year sales slump of about 50% in March. The company is delaying more than $50 million worth of planned capital expenditures through the second quarter and cutting its advertising expenditures by around 50%, along with reducing discretionary expenses.

Price Performance

Company

Last Week

Last 6 Months

GM

-15.4%

-48.1%

F

-15.7%

-51.1%

TSLA

-4.4%

101.9%

TM

-8.2%

-12.3%

HMC

-15.2%

-22.4%

HOG

-16.1%

-55.9%

AAP

-12.3%

-46.5%

AZO

-9.6%

-25.5%

 

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past week, all the stocks have declined, with Harley-Davidson being the maximum loser. In the past six months, all stocks apart from Tesla have witnessed a decline.

What’s Next in the Auto Space?

Watch out for further impact of the pandemic on the auto sector. All eyes will remain glued to how automakers tackle the coronavirus scare and make resultant changes in business operations. 

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