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Auto Stock Roundup: Volkswagen's $2.3B Investment, Navistar's Q2 Results & More
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U.S. auto sales declined year over year in May but showed signs of recovery from the dismal April figures, as states have eased restrictions and car dealers are opening stores. Toyota, Honda and Hyundai Motor reported double-digit sales decline from May 2019. Automotive firms have finally embraced online sales and are offering generous incentives to lure people into buying new vehicles. Meanwhile, Germany’s Chancellor Angela Merkel unveiled a €130-billion ($146 billion) COVID-19 recovery package last week, which provided sweeping incentives for electric cars.
Navistar International Corporation reported second-quarter fiscal 2020 loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, it had recorded earnings of $1.06 a share. The truck manufacturer generated $1,925 million in revenues, which surpassed the Zacks Consensus Estimate of $1,746 million. However, revenues marked a 35.8% year-over-year plunge on lower volumes in the company's core (class 6-8 trucks and buses in the United States and Canada) market due to the coronavirus outbreak. Navistar scrapped its fiscal 2020 guidance as it expects that the pandemic’s impact will strain the company’s operations in the upcoming period.
In a bid to expand foothold in China’s electric car market, Volkswagen (VWAGY - Free Report) agreed to make an investment of 2.1 billion euros (or $2.33 billion) in two China-based electric vehicle (EV) players. Volkswagen is raising its stake in a China-based EV joint venture with JAC Motors from 50% to 75% through the acquisition of 50% of Jianghuai Automobile Group, the parent company of JAC. The German auto giant will also acquire 26.5% of Guoxuan High-tech Co. Ltd. The firm will supply batteries to Volkswagen’s EV models in China. Volkswagen beefed up autonomous vehicle drive by closing the $2.6-billion investment in Argo AI. The $2.6-billion deal includes $1 billion in cash and Argo taking over Volkswagen’s European self-driving unit, valued at $1.6 billion.
Ford (F - Free Report) announced that it will bring back a well-known model of the Mustang called the Mustang Mach 1 in 2021. The Mustang Mach 1, with a 5-liter V8 engine, is anticipated to offer greater performance than the current Mustang GT at 460 horsepower. Meanwhile, Ford’s China joint venture with Changan Automobile plans to launch a hybrid car model with batteries built by the China-based battery maker BYD Co Ltd. The companies are currently awaiting government approval to develop a hybrid plug-in model equipped with BYD's batteries. Notably, this marks BYD's first battery-supply deal with a major global automaker.
Meritor announced a restructuring plan to boost the firm’s cash position for countering the rising uncertainties related to the coronavirus crisis. The company is expected to slash the global headcount of salaried workers by 8% in a bid to reduce labor expenses and eliminate certain hourly jobs. Additionally, Meritor predicts declines in most global truck and trailer market volumes for the third quarter of fiscal 2020. Meanwhile, the firm expects revenues of $400-$500 million and cash flow from operations in the band of negative $150 to negative $225 million for the next quarter.
Westport Fuel Systems Inc. (WPRT - Free Report) reported loss per share of 11 cents for first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 5 cents. The figure was also wider than the year-ago loss of 2 cents a share. Westport logged consolidated revenues of $67.2 million for the first quarter, down 8% year over year. However, revenues surpassed the Zacks Consensus Estimate of $59 million. Westport had cash and cash equivalents of $39 million as of Mar 31, 2020, down from $46 million on Dec 31, 2019. Total debt rose to $50 million in the reported quarter from $49 million as of Dec 31, 2019.
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 stocks have increased apart from Tesla TSLA. In the past six months, all the stocks have declined except Tesla.
What’s Next in the Auto Space?
Watch out for usual news releases and further updates on the impact of the COVID-19 pandemic on the auto sector.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Image: Bigstock
Auto Stock Roundup: Volkswagen's $2.3B Investment, Navistar's Q2 Results & More
U.S. auto sales declined year over year in May but showed signs of recovery from the dismal April figures, as states have eased restrictions and car dealers are opening stores. Toyota, Honda and Hyundai Motor reported double-digit sales decline from May 2019. Automotive firms have finally embraced online sales and are offering generous incentives to lure people into buying new vehicles. Meanwhile, Germany’s Chancellor Angela Merkel unveiled a €130-billion ($146 billion) COVID-19 recovery package last week, which provided sweeping incentives for electric cars.
(Read the Last Auto Stock Roundup here)
Recap of the Week’s Most Important Stories
Navistar International Corporation reported second-quarter fiscal 2020 loss of 10 cents per share, narrower than the Zacks Consensus Estimate of a loss of 72 cents. In the year-ago quarter, it had recorded earnings of $1.06 a share. The truck manufacturer generated $1,925 million in revenues, which surpassed the Zacks Consensus Estimate of $1,746 million. However, revenues marked a 35.8% year-over-year plunge on lower volumes in the company's core (class 6-8 trucks and buses in the United States and Canada) market due to the coronavirus outbreak. Navistar scrapped its fiscal 2020 guidance as it expects that the pandemic’s impact will strain the company’s operations in the upcoming period.
In a bid to expand foothold in China’s electric car market, Volkswagen (VWAGY - Free Report) agreed to make an investment of 2.1 billion euros (or $2.33 billion) in two China-based electric vehicle (EV) players. Volkswagen is raising its stake in a China-based EV joint venture with JAC Motors from 50% to 75% through the acquisition of 50% of Jianghuai Automobile Group, the parent company of JAC. The German auto giant will also acquire 26.5% of Guoxuan High-tech Co. Ltd. The firm will supply batteries to Volkswagen’s EV models in China. Volkswagen beefed up autonomous vehicle drive by closing the $2.6-billion investment in Argo AI. The $2.6-billion deal includes $1 billion in cash and Argo taking over Volkswagen’s European self-driving unit, valued at $1.6 billion.
Ford (F - Free Report) announced that it will bring back a well-known model of the Mustang called the Mustang Mach 1 in 2021. The Mustang Mach 1, with a 5-liter V8 engine, is anticipated to offer greater performance than the current Mustang GT at 460 horsepower. Meanwhile, Ford’s China joint venture with Changan Automobile plans to launch a hybrid car model with batteries built by the China-based battery maker BYD Co Ltd. The companies are currently awaiting government approval to develop a hybrid plug-in model equipped with BYD's batteries. Notably, this marks BYD's first battery-supply deal with a major global automaker.
Meritor announced a restructuring plan to boost the firm’s cash position for countering the rising uncertainties related to the coronavirus crisis. The company is expected to slash the global headcount of salaried workers by 8% in a bid to reduce labor expenses and eliminate certain hourly jobs. Additionally, Meritor predicts declines in most global truck and trailer market volumes for the third quarter of fiscal 2020. Meanwhile, the firm expects revenues of $400-$500 million and cash flow from operations in the band of negative $150 to negative $225 million for the next quarter.
Westport Fuel Systems Inc. (WPRT - Free Report) reported loss per share of 11 cents for first-quarter 2020, wider than the Zacks Consensus Estimate of a loss of 5 cents. The figure was also wider than the year-ago loss of 2 cents a share. Westport logged consolidated revenues of $67.2 million for the first quarter, down 8% year over year. However, revenues surpassed the Zacks Consensus Estimate of $59 million. Westport had cash and cash equivalents of $39 million as of Mar 31, 2020, down from $46 million on Dec 31, 2019. Total debt rose to $50 million in the reported quarter from $49 million as of Dec 31, 2019.
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 stocks have increased apart from Tesla TSLA. In the past six months, all the stocks have declined except Tesla.
What’s Next in the Auto Space?
Watch out for usual news releases and further updates on the impact of the COVID-19 pandemic on the auto sector.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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