The Zacks Analyst Blog Highlights: Twitter, General Motors, Ford Motor, Standard Motor Products and Magna International

Zacks

For Immediate Release
 
Chicago, IL – May 07, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Twitter (TWTR-Free Report), General Motors Company (GM-Free Report), Ford Motor Co. (F-Free Report), Standard Motor Products Inc. (SMP-Free Report) and Magna International Inc. (MGA-Free Report).
 
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Twitter Down Big as Lockup Expires
 
Shares of social media platform Twitter (TWTR-Free Report) are moving sharply lower today, tumbling by as much as 12% at time of writing. This downturn in TWTR continues the slump in shares of the newly-public company, as Twitter recently delivered investors an uninspiring earnings report that featured lackluster user growth and sent shares falling by nearly 10% following that release.

Today though, the main focus was on the expiring lockup period for nearly 490 million shares held by Twitter insiders and executives. Now, these insiders can sell their shares, and it looks as if many decided to exercise this option in early Tuesday trading.

Shares hit a fresh all-time low as a result of many of these insiders selling their shares at the first possible opportunity, pushing TWTR further below the IPO price and down to just $34/share. Volume was also elevated in Tuesday trading—to say the least—as close to 65 million shares moved hands by midday, compared to roughly 13 million in a normal full session.

Longer Term Prospects

Obviously the exodus of Twitter shareholders on the lockup expiration day isn’t good news for the future, but what has been the trend for earnings estimates been as of late?

The earnings estimate revision picture is overall pretty mixed for TWTR. However, it is worth noting that TWTR now has a Zacks Rank #3 (Hold), down recently from a Buy, and that many of the newer estimates have been falling for the company.

In fact, revisions downward have been outnumbering upward revisions on roughly a 5:1 ratio over the past week, pushing the current quarter estimate down to a loss of 27 cents a share from last week’s consensus of a 24 cent loss.

The biggest change was in the company’s longer term outlook though, as the consensus estimate for next year’s earnings fell from a loss of 67 cents a share to today’s consensus of a loss of 85 cents a share, suggesting increased bearishness on the firm.

Bottom Line

Twitter has faced a very rough period as of late, as the stock has struggled under the weight of high expectations and general disdain against momentum securities. Plus, with weakness in terms of the company’s user growth, worries are starting to develop over the firm’s ability to grow revenues and eventually create profits over the long term too.
 
Add in the stampede of Twitter insiders out of TWTR, and investors arguably have a continued recipe for disaster on their hands with this floundering social media stock. Personally, I am staying far away from TWTR for the time being as a result of this
 
Auto Sales Up: Buy These Stocks

The U.S. automakers have started 2014 on a positive note by reporting strong sales results back to back for April and March. On the basis of seasonally adjusted annualized rate (:SAAR), the auto sales in April have increased 5.9% to 16.1 million units from the year-ago level of 15.2 million. However in March, sales were at 16.4 million units.

Performance of Domestic Automakers

General Motors Company (GM-Free Report) recorded 254,076 vehicle sales in April, up 7% year over year. Retail sales also increased 8%, while fleet sales improved 5%. The company is set to launch many vehicles in 2014, which are likely to improve sales in the coming months.

Ford Motor Co. (F-Free Report) reported a 1% decline in total sales from the year-ago period to 211,126 vehicles in Apr 2014. Retail sales fell 1% year over year to 141,950 units. However, commercial and government fleet sales increased significantly.

Chrysler Group recorded a 14% year-over-year rise in sales, pulling the figure up to 178,652 vehicles. Chrysler witnessed a year-over-year increase in monthly sales for 49 consecutive months. Moreover, this is the best April sales for the group since 2007.   

Reasons Behind Increasing Auto Sales

With the arrival of spring season, the automobile sector started to bloom by reporting positive sales results. It is the combined effect of delayed purchases and the beginning of the spring selling season that bolstered auto sales in April. This had also helped sales to move north in March.

Another factor which played an important role is the incentives given by the automakers and the dealers. Incentives are given in the form of discount, low interest rate and free accessories, among others, to attract customers.  According to TrueCar, in April, average incentive is expected to be $2,580 which is $41 higher than last year. In March, there was almost an 8% hike in incentives, which increased the average incentive per new vehicle sale to $2,800.

Durable Orders

Auto parts industry is likely to benefit from these impressive auto sales results. This has been somewhat proved right by the previous durable order reports. According to the U.S. Department of Commerce, new orders for motor vehicles and parts increased 0.4% in March. This followed a 4.3% increase in February after declining 2% in January.  

Auto Stocks to Buy Now
 
Standard Motor Products Inc. (SMP-Free Report) is a manufacturer and seller of replacement parts in the automotive aftermarket industry. The company develops engine management replacement parts, and also manufactures replacement parts for automotive temperature control systems.

Recently, the company reported a 26.2% rise in adjusted earnings per share to 53 cents in the first quarter of 2014. Also, earnings outpaced the Zacks Consensus Estimate of 47 cents.

SMP currently holds a Zacks Rank #2 (Buy) and has expected current year earnings growth of 14.08%. The forward price-to-earnings ratios (P/E) for the current financial year (F1) is 14.67 and price-to-sales (P/S) ratio is 0.9. The stock has returned 5.5% year to date.

Magna International Inc. (MGA-Free Report) is manufacturer and seller of automotive products. The company’s offerings include body, chassis, and renewable energy and powertrain systems. The company also offers closure systems like door modules and window systems.

MGA currently holds a Zacks Rank #2 (Buy) and has expected current year earnings growth of 11.87%. The forward price-to-earnings ratios (P/E) for the current financial year (F1) is 12.21 and price-to-sales (P/S) ratio is 0.63. The stock has returned 20.3% year to date.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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