Auto Stock Roundup: Tesla to Issue New Shares, GM to Import China-Made Buick
Tesla Motors, Inc.’s TSLA new public offer of shares was the biggest headline of the week in the auto sector. However, the news did not come as a surprise as speculations were rife the preceding week.
Another major development was General Motors Company’s GM decision to import Buick vehicles made in China for sale in the U.S. Meanwhile, Ford Motor Co. F started the production of the new Ford Everest in China, albeit for sale in the Asian country itself, while Lear Corp. LEA acquired intellectual property and technology from a California-based company.
With the earnings season at its tail end, Advance Auto Parts Inc. AAP was the only company in the auto sector to report financial results last week. The automotive parts’ supplier surpassed earnings estimates but narrowly missed on revenues. However, both earnings and revenues showed year-over-year improvement.
(Read last to last week’s recap here: Auto Stock Roundup for Aug 13, 2015)
Recap of the Week’s Most Important Stories
1. Tesla revealed plans to offer $500 million worth of shares in an underwritten registered public offering, with a 30-day option to the underwriters to purchase another $75 million worth of shares. The company also revealed that CEO Elon Musk would purchase shares worth $20 million at the public offering price. In a SEC filing, Tesla revealed that around 2,100,000 shares will be issued (including 83,974 shares to be purchased by Musk), leading to net proceeds of $492.6 million. The quantity could increase to 2,415,000 shares, or $566.5 million, if the underwriters exercise all their options to purchase additional shares.
However, the next day, Tesla made another SEC filing which raised the number of shares to be issued to 2,694,934 (including 82,645 shares to be purchased by Musk), leading to net proceeds of $641.9 million. The quantity could increase to 3,099,173 shares, or $738.3 million, if the underwriters exercise all their options to purchase additional shares (read more: Tesla on an Upswing: Thanks to Stock Issue, Raised Target Price).
2. Advance Auto Parts reported a 9.1% rise in adjusted comparable earnings to $2.27 per share in the second quarter of fiscal 2015 (ended Jul 18) from $2.08 in the prior-year quarter. Moreover, the figure topped the Zacks Consensus Estimate of $2.25. Revenues increased 1% year over year to $2.37 billion, marginally missing the Zacks Consensus Estimate of $2.38 billion. The year-over-year rise in sales was driven by benefits from the addition of new stores over the last 12 months and an increase in comparable store sales. Advance Auto Parts expects adjusted earnings per share in the range of $8.10–$8.30 for fiscal 2015 (read more: Advance Auto Parts' Q2 Earnings Beat Estimates, Rise Y/Y).
3. General Motors plans to export Buick Envision vehicles from its Chinese plant to the U.S. by the end of 2016, per media reports. This will make General Motors the first automaker to import vehicles from China for sale in the U.S. The company initiated production of Envision in China last year. General Motors also plans to shift the production of most other Buick models, except the mid-sized LaCrosse sedan and the large Enclave crossover, to China or Europe soon (read more: General Motors to Sell China-made Buicks in US).
4. Ford started producing the new Ford Everest in China, making it the first SUV jointly manufactured by the automaker with its Chinese commercial vehicle partner Jiangling Motors Corporation (JMC). The vehicle is being produced at the JMC Xiaolan Plant in Nanchang for the China market.
5. Lear Corp. announced the acquisition of intellectual property and technology from California-based Autonet Mobile. Lear Corp. also hired some important members of the Autonet Mobile’s software and product development team. Autonet Mobile is a developer of software and devices for automotive applications. The acquisition will help Lear Corp in expanding its Electrical business.
Performance
The performance of most auto stocks was positive over the last one-week period. Advance Auto Parts gained the maximum, driven by the 9.2% surge in its share price on Aug 13, following its earnings release. Meanwhile, Honda Motor Co., Ltd. HMC lost the most over the week.
Driven by the surge in prices over the week as well as the general trend of an upward movement since May, Advance Auto Parts was the top gainer in the last six months. Meanwhile, General Motors was the worst performer over this period with a 16% loss.
Company | Last 1-Week Period | Last 6 Months |
GM | +2.5% | -16.0% |
F | +0.6% | -9.9% |
TSLA | +7.2% | +17.6% |
TM | -1.1% | -7.9% |
HMC | -2.9% | -0.1% |
HOG | +2.0% | -5.7% |
AAP | +9.2% | +21.1% |
AZO | +4.0% | +20.4% |
What’s Next in the Auto Space?
In the coming week, a few automakers will release their Europe auto sales data for July.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
FORD MOTOR CO (F): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
LEAR CORPORATN (LEA): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
To read this article on Zacks.com click here.
