On Oct 8, 2013, Zacks Investment Research upgraded American Axle & Manufacturing Holdings Inc. (AXL) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
American Axle reported positive earnings surprise in both quarters of 2013. The company reported second-quarter 2013 earnings of 34 cents per share, beating the Zacks Consensus Estimate of 30 cents. However, earnings per share plunged 38.2% from 55 cents per share in the comparable quarter of 2012 (excluding special items).
Revenues went up 8.1% to $799.6 million compared with $739.8 million in the second quarter of 2012. The results were favorably impacted by recovery in the North American light truck market together with the launch of products ensuring fuel efficiency, reduced emissions and improved safety.
American Axle is undergoing a significant expansion of its manufacturing footprint in Asia, where growing demand for vehicles is boosting production volumes. The company expects to accelerate the expansion of its global manufacturing footprint in Brazil, China, India, Mexico, Poland and Thailand.
American Axle is focused on diversification and geographic expansion. The company’s backlog of new and incremental business to be launched between 2012 and 2014 is valued at $1.1 billion. However, weak SUV demand, high commodity costs and pricing pressure by original equipment manufacturers (OEMs) remain causes for concern.
The Zacks Consensus Estimate for American Axle’s 2013 earnings per share stands at $1.77, up 48.55% over 2012. The estimate for 2014 is $2.83 per share, up 60.34% year over year.
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