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Auto Stock Roundup: AZO, AAP, CPRT Earnings Beat, F Resumes F-150 Production

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Auto companies across the globe continue to focus on electric vehicles (EVs). Government regulations have led to an increased preference for EVs over other combustion-engine vehicles.

China witnessed strong demand for EVs among the major automotive markets. Further, the country is providing subsidies for encouraging buyers to opt for more such environment-friendly vehicles. Increased demand in the mainland prompted many automakers in China to manufacture and launch EVs.

With an intention to challenge the dominance of domestic players, many foreign automakers are collaborating with China’s national companies to offer EVs.

This week saw earnings beats from a few companies, including AutoZone, Inc. AZO, Advance Auto Parts, Inc. AAP and Copart, Inc. CPRT.

(Read the previous roundup here: Auto Stock Roundup for May 17, 2018)

Recap of This Week’s Most Important Stories

1.    Ford Motor Company F announced the production restart of its F-150 pickup truck at its Dearborn, MI facility on Friday. The production of the same model will resume at its facility in Kansas City, MO and its F-series truck hub in Louisville, KY on Monday.

The production of the F-150 truck was stopped on May 7. An explosion on May 2 at its parts supplier, Meridian Magnesium plant, led to a shortage of parts for manufacturing the F-150 pickup trucks. The disaster at Eaton Rapids, MI hub caused major manufacturing disturbance in the automotive industry, forcing many automakers to make alterations or halt production.

In order to help Meridian from the disaster, Ford, along with suppliers and contractors, removed 19 dies from the damaged facility. This included shifting an 87,000-pound die from Eaton Rapids to Nottingham, U.K. by using one of the largest cargo planes, Antonov. A die is a tool that is used to cut or shape material, using a press. The company also examined and repaired dies to restart the production at Meridian Magnesium’s Eaton Rapids facility. (Read more: Ford Beats Odds to Restart F-150 Pickup-Truck Production)

Ford currently carries a Zacks Rank #3 (Hold).

2.    AutoZone reported earnings of $13.42 per share in the third quarter of fiscal 2018 (ended May 5, 2018), beating the Zacks Consensus Estimate of $12.99. The figure was $11.44 in third-quarter fiscal 2017.

Revenues improved 1.6% year over year to $2.66 billion in the reported quarter. However, the figure missed the Zacks Consensus Estimate of $2.71 billion. Domestic same-store sales (sales of stores open at least for a year) rose 0.6% year over year.

Gross profit increased to $1.42 billion from $1.38 billion in the prior-year quarter. Operating profit (EBIT) rose to $545.8 million from $529.6 million registered in the third quarter of fiscal 2017.

Operating expenses, as a percentage of sales, increased to 33% from 32.4% a year ago.

During the reported quarter, AutoZone opened 26 new stores and relocated one in the United States. The company also opened four new stores in Mexico. As of May 5, the company had 5,540 stores across 50 states in the United States, the District of Columbia and Puerto Rico; 536 in Mexico and 16 in Brazil. The total store count was 6,092 as of that date.

AutoZone’s inventory improved 3.7% year over year in the quarter under review, driven by store openings and increased product placement, partially offset by the sale of two business units. Inventory per location increased to $658,000 from the year-ago figure of $653,000. (Read more: AutoZone's Q3 Earnings Beat Estimates, Revenues Miss)

AutoZone currently carries a Zacks Rank #3.

3.    Advance Auto Parts reported adjusted earnings of $2.10 per share in first-quarter 2018 (ended Apr 21, 2018), up from $1.60 in the prior-year quarter. Also, the figure surpassed the Zacks Consensus Estimate of $1.98. Adjusted operating income increased to $224.1 million from $204.9 million in first-quarter 2017.

Advance Auto Parts reported net revenues of $2.87 billion, missing the Zacks Consensus Estimate of $2.91 billion. Revenues were 0.6% lower than the year-ago quarter. During the quarter under review, comparable store sales were down 0.8% year over year.

Gross profit was $1.27 billion in the reported quarter, almost in line with the prior-year period. Gross profit margin increased 32 basis points year over year to 44.3%.

Adjusted selling, general and administrative (SG&A) expenses totaled $1.05 billion or 36.5% of sales compared with $1.07 billion or 36.9% of sales in the year-ago period. (Read more: Advance Auto Parts Q1 Earnings Beat Estimates, Up Y/Y)

Advance Auto Parts currently carries a Zacks Rank #3.

4.    Meritor, Inc. MTOR reported the opening of the Eastern Canada Regional Distribution Center in Mississauga, Ontario. This marks the company’s fourth distribution facility in the North American aftermarket. The new facility will cater to dealers and warehouse distributors of seven provinces.

Per management, the addition of Mississauga center shows Meritor’s commitment to simplify business transactions and enhance customer satisfaction. This addition is expected to help east Canadian customers to receive their orders in shorter lead times, with mostly unchanged ordering and processing practices. Orders, which will be placed before 4 p.m. ET, will be shipped on the same day. Further, customers can opt for a product-pickup option.

The newly added hub stocks Meritor’s Aftermarket brand portfolio to cater its customers in Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island and Quebec. (Read more: Meritor Opens New North American Distribution Hub in Canada)

Meritor currently carries a Zacks Rank #2 (Buy).

5.    Copart reported adjusted earnings per share of 52 cents in third-quarter fiscal 2018 (ended Apr 30, 2018), beating the Zacks Consensus Estimate of 48 cents. The bottom line improved 36.8% from 38 cents recorded in the year-ago quarter.

Net income was $127.3 million, reflecting a surge of 40.6% or $36.8 million from third-quarter fiscal 2017.

Copart’s revenues rose 27.9% to $478.2 million from the year-ago quarter and surpassed the Zacks Consensus Estimate of $435 million. Service revenues went up 24% year over year to $410.8 million, while revenues from vehicle sales gained 62% to $67.4 million in comparison with the prior-year quarter.

Gross profit improved 27% to $219.1 million from $173 million a year ago. Total operating expenses increased to $303.6 million from $237 million recorded in the prior-year period.

Operating income increased to $174.6 million from $136.8 million a year ago.

Copart had cash and cash equivalents of $204.3 million as of Apr 30, 2018, compared with $210 million as of Jul 31, 2017. Long-term debt, revolving loan facility and capital lease obligations were $399 million as of Apr 30, 2018, which recorded a decline from $550.8 million as of Jul 31, 2017.

In third-quarter fiscal 2018, Copart generated net cash flow of $377.2 million from operations compared with $347.8 million a year ago. (Read more: Copart’s Q3 Earnings & Revenues Surpass Estimates)

Copart currently carries a Zacks Rank #3.


Last week, Advance Auto Parts, Inc. AAP recorded the maximum increase. The maximum decline was registered by AutoZone.

In the past six months, the maximum rise has been recorded by Advance Auto Parts, while General Motors Company’s GM shares have declined the most.

Company Last Week Last 6 Months
GM -0.5% -12.6%
F 0.4% -1.9%
TSLA -2.6% -11.9%
TM -1.8% 7%
HMC -0.4% 0.1%
HOG -0.6% -10.1%
AAP 3.5% 37.3%
AZO -4% -2.5%

What’s Next in the Auto Space?

Watch out for the usual news releases of other auto companies over the next week.

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Ford Motor Company (F) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
Meritor, Inc. (MTOR) : Free Stock Analysis Report
Copart, Inc. (CPRT) : Free Stock Analysis Report
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