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Auto Stock Roundup: Advance Auto Parts (AAP) & Tesla (TSLA) Report Q4 Results

Zacks Equity Research

The auto sector saw mixed developments in the past week, however, most of the companies from this space witnessed positive stock price movement. Advance Auto Parts, Inc. AAP and Tesla Motors, Inc. TSLA reported fourth-quarter 2016 results.

General Motors Company’s GM sale of Opel may be likely as officials support the deal, while Ford Motor Co. F is planning to go ahead with its prior plan to open two plants in Mexico.

Toyota Motor Corporation TM has partnered with Shell to build hydrogen fueling stations to support its hydrogen fuel-based vehicles.

(Read the previous roundup here: Auto Stock Roundup for Feb 16, 2017)

Recap of the Week’s Most Important Stories

1. Advance Auto Parts posted adjusted earnings of $1.00 per share in the fourth quarter of 2016 lagging the Zacks Consensus Estimate of $1.09. Earnings fell 18% from $1.22 per share recorded in the fourth quarter of 2015. Revenues came in at $2.08 billion, 2.5% higher than the year-ago quarter. Further, revenues surpassed the Zacks Consensus Estimate of $2.01 billion.

Adjusted earnings for 2016 fell 8.6% to $7.15 per share from $7.82 earned in 2015. Earnings also missed the Zacks Consensus Estimate of $7.24. Revenues for 2016 declined 1.7% to $9.57 billion from $9.74 billion in 2015, but exceeded the Zacks Consensus Estimate of $9.5 billion.

Advance Auto Parts’ total store count was 5,189, including 127 Worldpac branches as of Dec 31, 2016. Advance Auto Parts served roughly 1,250 independently owned Carquest stores as of the above-mentioned date. (Read more: Advance Auto Parts Misses on Q4 Earnings, Beats Sales)

Advance Auto Parts carries a Zacks Rank #3 (Hold).

2. Tesla’s adjusted loss in the fourth quarter of 2016 came in at $1.25 per share, compared with a loss of $2.44 in the year-ago quarter. However, the loss was wider than the Zacks Consensus Estimate of $1.19. Revenues soared 88% year over year to $2.28 billion, surpassing the Zacks Consensus Estimate of $2.2 billion.

For full-year 2016, Tesla reported an adjusted loss of $5.19 per share, compared with the loss of $6.93 reported in 2015. The loss was wider than the Zacks Consensus Estimate of $4.73. Revenues for the year stood at $7 billion, up from the $4.05 billion recorded in 2015. The figure narrowly beat the Zacks Consensus Estimate of $6.9 billion.

Tesla targets 47,000−50,000 vehicle deliveries in the first half of 2017, representing a 61−71% growth year over year. Moreover, in the first quarter of 2017, the company expects automotive gross margin to improve to the third quarter of 2016 level and continue to expand in the second quarter of 2017. The company remains on track to begin production of Model 3 in Jul 2017, and anticipates capital expenditure between $2 billion and $2.5 billion prior to the commencement of the production. (Read More: Tesla Q4 Loss Wider than Expected, Revenues Beat)

Tesla carries a Zacks Rank #4 (Sell).

3. General Motors has been in talks with France's PSA Group to sell its underperforming European business - Opel. However, union workers were demanding the security of German factories and workers, which accounts for about 19,000 Opel employees. Recent assurances by PSA Group have resulted in German officials supporting the deal. General Motors could receive up to $1 billion in cash if the deal is finalized. Moreover, the company will be able to spend more of its resources on new technology based ventures.

General Motors currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. Ford has decided to go forward with its prior plan to open two auto-parts plants in Mexico this year. This comes amid the pressure faced by U.S. auto manufacturers to prevent outsourcing of production to low-cost labor countries. Earlier, Ford had discarded its $1.6 billion plan to build a small-car production plant in Mexico. However, the two facilities scheduled to begin production this year have been under way since 2015. The engines and transmissions manufactured at the plants will be supplied to other Ford factories in the world. The projects are expected to cost the company $2.5 billion and will have employee strength of 3,800.

Ford carries a Zacks Rank #3.

5. Toyota and Shell have announced a partnership to build seven hydrogen fuelling stations in California. The companies are expected to contribute $11.4 million toward the project while The California Energy Commission (CEC) posted a Notice of Proposed Award (NOPA) worth $16.4 million which could be provided to the companies. Toyota aims to sell 3,000 hydrogen vehicles this year and 30,000 vehicles in 2020. (Read More: Toyota Ties Up with Shell for Hydrogen Vehicles Stations)

Toyota carries a Zacks Rank #3.

Performance

Most auto stocks recorded gains in the last week. Advance Auto Parts lost the most among the stocks listed below, while General Motors gained the most.

Over the last six months, Tesla was the biggest gainer, while AutoZone, Inc. AZO was the worst performer.

Company

Last 1-Week Period

Last 6 Months

GM

+2.0%

+18.6%

F

+0.3%

+2.0%

TSLA

-2.2%

+21.7%

TM

+0.7%

-4.9%

HMC

+0.2%

+5.4%

HOG

+0.4%

+3.6%

AAP

-2.6%

+1.1%

AZO

-0.6%

-6.2%

Auto-Tires-Trucks Sector 5YR % Return

 

Auto-Tires-Trucks Sector 5YR % Return

What’s Next in the Auto Space?

Some auto-makers are expected to report the U.S. Feb 2017 sales in the coming week. An announcement regarding the likelihood of the PSA-Opel deal is also expected soon.

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Ford Motor Company (F): Free Stock Analysis Report
 
Tesla Motors, Inc. (TSLA): Free Stock Analysis Report
 
Toyota Motor Corp Ltd Ord (TM): Free Stock Analysis Report
 
Advance Auto Parts Inc (AAP): Free Stock Analysis Report
 
AutoZone, Inc. (AZO): Free Stock Analysis Report
 
General Motors Company (GM): Free Stock Analysis Report
 
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