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Auto Stock Roundup: Here's How Firms are Tackling Coronavirus Crisis
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The automobile industry is facing a challenging time amid coronavirus jitters. Amid the virus-led uncertainty, more and more auto firms are withdrawing their annual guidance and resorting to strategic cost-cut measures in a bid to preserve financial flexibility. Dividend cuts, buyback suspension, employee layoff and hiring freezes are becoming commonplace. With the pandemic showing little signs of abatement, many companies are extending factory closures. Auto biggies including Toyota, Honda and Fiat Chrysler have pushed back the restart of plants in North America and will now resume operations in early May.
1. Tesla (TSLA - Free Report) will cut pay for all salaried employees and furlough hourly workers amid the coronavirus pandemic. The electric vehicle maker plans to resume production across its U.S. facilities on May 4, per media sources. Reportedly, salaried employees will see a temporary 10% pay cut, while directors' pay will be reduced by 20% and executives at the level of vice president and above will see a 30% cut. The pay reductions are expected to be in place until the end of the second quarter to deal with the downturn caused by production shutdowns. Wage adjustments and equity grants will also be put on hold due to COVID-19 concerns.Tesla currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. AutoZone, Inc. (AZO - Free Report) has temporarily suspended the stock buyback program to conserve cash amid coronavirus-led uncertainty.The company also announced new Emergency-Time Off benefit enhancement for employees and restructured credit arrangements to assure liquidity. This additional bank of hours, 80 hours for full-time and up to 40 hours for part-time employees in the United States and Puerto Rico, was created to extend benefits for the overall wellbeing of employees amid the coronavirus pandemic.
3. Genuine Parts Company (GPC - Free Report) has withdrawn its 2020 guidance amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainties. The firm has expanded the $100-million cost savings plan unveiled last October to include a number of initiatives in order to reduce labor and other costs. The company is also suspending stock buybacks in a bid to preserve financial flexibility. Nonetheless, it plans to maintain dividend payouts, thereby preserving shareholder values.
4. Advance Auto Parts (AAP - Free Report) has withdrawn its 2020 guidance and suspended its share-buyback program until further notice amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainties. It has also slashed its capital spending for 2020 by 50% to minimize costs during a period of reduced business with many drivers subject to stay-at-home orders to curb the spread of the virus.
5. General Motors (GM - Free Report) has signed a $489.4-million contract with the U.S. Department of Health and Human Services to build 30,000 ventilators in collaboration with Ventec Life Systems for the national stockpile to aid COVID-19 patients. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators. General Motors will manufacture and supply the ventilators to the government by the end of August, with the first 6,132 ventilators to be delivered by Jun 1. Production for the same is expected to begin next week in the company’s Indiana plant. General Motors will also bring an estimated 1,000 full-time temporary workers back to the plant to build the ventilators.
Price Performance
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 increased, with Harley-Davidson being the maximum gainer. 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 deal with the coronavirus rampage, as first-quarter earnings lurk around the corner.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
Image: Bigstock
Auto Stock Roundup: Here's How Firms are Tackling Coronavirus Crisis
The automobile industry is facing a challenging time amid coronavirus jitters. Amid the virus-led uncertainty, more and more auto firms are withdrawing their annual guidance and resorting to strategic cost-cut measures in a bid to preserve financial flexibility. Dividend cuts, buyback suspension, employee layoff and hiring freezes are becoming commonplace. With the pandemic showing little signs of abatement, many companies are extending factory closures. Auto biggies including Toyota, Honda and Fiat Chrysler have pushed back the restart of plants in North America and will now resume operations in early May.
(Read the Last Auto Stock Roundup here)
Recap of the Week’s Most Important Stories
1. Tesla (TSLA - Free Report) will cut pay for all salaried employees and furlough hourly workers amid the coronavirus pandemic. The electric vehicle maker plans to resume production across its U.S. facilities on May 4, per media sources. Reportedly, salaried employees will see a temporary 10% pay cut, while directors' pay will be reduced by 20% and executives at the level of vice president and above will see a 30% cut. The pay reductions are expected to be in place until the end of the second quarter to deal with the downturn caused by production shutdowns. Wage adjustments and equity grants will also be put on hold due to COVID-19 concerns.Tesla currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. AutoZone, Inc. (AZO - Free Report) has temporarily suspended the stock buyback program to conserve cash amid coronavirus-led uncertainty.The company also announced new Emergency-Time Off benefit enhancement for employees and restructured credit arrangements to assure liquidity. This additional bank of hours, 80 hours for full-time and up to 40 hours for part-time employees in the United States and Puerto Rico, was created to extend benefits for the overall wellbeing of employees amid the coronavirus pandemic.
3. Genuine Parts Company (GPC - Free Report) has withdrawn its 2020 guidance amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainties. The firm has expanded the $100-million cost savings plan unveiled last October to include a number of initiatives in order to reduce labor and other costs. The company is also suspending stock buybacks in a bid to preserve financial flexibility. Nonetheless, it plans to maintain dividend payouts, thereby preserving shareholder values.
4. Advance Auto Parts (AAP - Free Report) has withdrawn its 2020 guidance and suspended its share-buyback program until further notice amid significant deterioration of the macro-economic environment triggered by the coronavirus pandemic and subsequent market uncertainties. It has also slashed its capital spending for 2020 by 50% to minimize costs during a period of reduced business with many drivers subject to stay-at-home orders to curb the spread of the virus.
5. General Motors (GM - Free Report) has signed a $489.4-million contract with the U.S. Department of Health and Human Services to build 30,000 ventilators in collaboration with Ventec Life Systems for the national stockpile to aid COVID-19 patients. The car giant will lend its logistics, purchasing and manufacturing expertise to ramp up the manufacture of critically-important ventilators. General Motors will manufacture and supply the ventilators to the government by the end of August, with the first 6,132 ventilators to be delivered by Jun 1. Production for the same is expected to begin next week in the company’s Indiana plant. General Motors will also bring an estimated 1,000 full-time temporary workers back to the plant to build the ventilators.
Price Performance
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 increased, with Harley-Davidson being the maximum gainer. 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 deal with the coronavirus rampage, as first-quarter earnings lurk around the corner.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.5% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>