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American Axle & Manufacturing Holdings Inc. Message Board

  • mardelli mardelli Jul 29, 2011 4:20 AM Flag

    Will Spike up

    Seeking ALPHA:
    American Axle (AXL) shares are trading around $10.68. AXL is a leading manufacturer of automotive components. The 50 day moving average is about $10.94 and the 200 day moving average is about $12.03. Earnings estimates for AXL are $1.79 per share in 2011. The P/E ratio is about 5. This stock is cheap, oversold and is likely to spike up on any market rallies to to the high short interest and undervaluation. Management is taking advantage of this lower price as they have been buying shares. You can see the repeated insider buying here.

    Merrill: has a PO target of $ 17


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    • Ford running double shifts at Wayne, Mi plant. Can 't keep up with demand on Focus. Things are looking up in auto sector.

    • Will pop and then plummet as usual. Every quarter, crazy good earnings beat, initial pop and then everyone sells the begeezies out of it for some unknown reason.

      Plus, I bought a bunch of August 11 strike calls yesterday, and the market isn't going to let me make money on them. Just the way it is...

      • 1 Reply to matthew_and_january
      • Merrill on AXL:

        Very solid 2Q for AXL
        AXL reported 2Q:11 cont. ops. EPS of $0.69, ahead of our estimate of $0.48 and
        consensus of $0.44. GAAP EPS of $0.65 included a $3.1mm (~$0.04/sh) debt
        refinancing charge. A lower than modeled tax rate also added ~$0.05/sh versus
        our estimates, but this was still a solid beat. The quarter was driven by a strong
        23% YoY increase in revenue to $686mm versus our $644mm estimate. Gross
        margin was also solid at 19% (BofAMLe 18.0%), which combined with SG&A as a
        % of sales at 8.6% (BofAMLe 8.8%) drove an operating margin of 10.4%
        (BofAMLe 9.2%). AXL’s 2Q adjusted EBITDA margin was also impressive at
        15.7%, and was well above our 14.7% forecast. We believe AXL’s execution will
        continue to improve in 2011, likely enhanced by a recovery in volumes.
        2011 revenue outlook raised
        AXL is now forecasting revenue of $2.5-$2.6bn (prior $2.4-$2.5bn), which
        compares top our $2.6bn estimate, and continues to expect an EBITDA margin of
        14.5%-15% (BofAMLe 14.8%), based on a 2011 US SAAR of 13mm (prior
        12.5mm) units. Although not explicitly mentioned in the press release, it appears
        that AXL continues to forecast YoY capex in 2011 of ~6% of sales, in order to
        support its 2011-2013 business backlog. Similar to other companies throughout
        the auto value chain, we believe AXL continues to prudently plan its business
        around conservative market demand forecasts and there may be upside.
        Balance sheet solid and improving
        AXL ended 2Q with cash and equivalents of $250mm, up from $217mm in cash at
        the end of 1Q11. In our view, AXL has made notable progress in strengthening its
        balance sheet and restructuring its operations. In fact, the company reduced debt
        by ~$47mm in 1H11, which follows similar actions in 2010, and we expect further
        delevering in the near term.
        Focus on North America to be beneficial
        We expect that a slowly improving US economy could bolster sales of light trucks,
        many of which are used for commercial purposes. AXL remains heavily exposed
        to the light truck and SUV platforms of GM and Chrysler for now, and therefore
        could see an outsized benefit from an economic recovery. It should also be noted
        that AXL is materially diversifying its sales base with non-GM sales increasing
        35% in the quarter to ~$183mm or about 27% of total sales.

        P.O.remains $ 17 with a BUY recommendation

21.03+0.01(+0.05%)1:02 PMEDT