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Auto Stock Roundup: BWA, AXL, GPC, CTB & AAP Beat on Earnings

Zacks Equity Research
There was an asset flow into U.s. treasuries and developed market stocks in the second quarter.

Some companies from the Auto sector — including BorgWarner Inc. BWA, American Axle & Manufacturing Holdings, Inc. AXL, Genuine Parts Company GPC, Cooper Tire & Rubber Co. CTB, and Advance Auto Parts, Inc. AAP — have reported quarterly results in the past week. During the quarter under review, earnings of all these companies surpassed the Zacks Consensus Estimate. Further, revenues of BorgWarner and American Axle beat the Zacks Consensus Estimate while the same for Genuine Parts and Advance Auto Parts were in line. However, Cooper Tire’s revenues missed estimates.

Recap of the Week’s Most Important Stories

1.    BorgWarner delivered adjusted earnings of $1.21 per share in fourth-quarter 2018, beating the Zacks Consensus Estimate of $1.07. The figure also increased from $1.07 per share recorded in the year-ago quarter. Net earnings were $230 million against net loss of $146.2 million in the prior-year quarter.

BorgWarner’s net sales declined 0.5% year over year to $2.57 billion, beating the Zacks Consensus Estimate of $2.56 billion. Net sales decreased roughly $65 million, owing to foreign currency fluctuation.

In the reported quarter, operating income amounted to $266 million compared with the prior-year figure of $208 million.

In 2018, the company’s net earnings increased to $931 million or $4.44 per share from $440 million or $2.08 per share in 2017.

Net sales for 2018 went up 7.5% year over year to $10.5 billion.

Net sales from the Engine segment decreased to $1.54 billion from $1.58 billion in the prior-year quarter. Excluding impacts of foreign currencies, the segment’s net sales rose 0.4% year over year and adjusted EBIT (earnings before interest, income taxes and non-controlling interest) declined 5.9% to $243 million.

At the Drivetrain segment, net sales increased to $1.05 billion in the fourth quarter from $1.02 billion in the prior-year quarter. Excluding impacts of foreign currencies, net sales improved 4.4% on a year-over-year basis and adjusted EBIT increased 7.4% to $133 million.

As of Dec 31, 2018, BorgWarner had $739.4 million in cash compared with $545.3 million as of Dec 31, 2017. Long-term debt was $1.9 billion, decreasing from $2.1 billion recorded at the end of 2017.

At the end of 2018, net cash provided by operating activities was $1.13 billion compared with $1.18 billion in the prior year. During the year, capital expenditure, including tooling outlays, decreased to $546.6 million from $560 million in 2017. (Read more: BorgWarner Q4 Earnings Surpass Estimates, Improve Y/Y)

BorgWarner currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    American Axle posted adjusted earnings of 45 cents per share in the fourth quarter, beating the Zacks Consensus Estimate of 43 cents. In fourth-quarter 2017, adjusted earnings were 89 cents.

During the quarter under review, the company reported net loss of $361.8 million or loss of $3.24 per share against net income of $106.3 million or 93 cents per share in the year-ago quarter.

Revenues decreased to $1.69 billion from the year-ago figure of $1.73 billion. The top line slightly surpassed the Zacks Consensus Estimate of $1.68 billion.

American Axle’s SG&A (Selling, General & Administrative) expenses were $97.1 million for fourth-quarter 2018 in comparison with $101 million in the prior-year quarter.

Gross profit decreased to $225.3 million in fourth-quarter 2018 from $294.3 million in the year-ago quarter. Operating loss during the reported quarter was $394.3 million against operating income of $148.6 million in fourth-quarter 2017.

For 2018, American Axle reported earnings of $3.28 per share, down from the 2017 figure of $3.75.

Net sales in 2018 were $7.27 billion, up from $6.27 billion in 2017. (Read more: American Axle Q4 Earnings Beat Estimates, Down Y/Y)

American Axle currently carries a Zacks Rank #3.

3.    Genuine Parts reported adjusted earnings of $1.35 per share in fourth-quarter 2018, up 13% year over year. The bottom line surpassed the Zacks Consensus Estimate of $1.33. During the reported quarter, each business segments witnessed revenue growth.

The company recorded net income of $186.7 million in fourth-quarter 2018, up from $108.2 million in the prior-year quarter.

Genuine Parts reported net sales of $4.6 billion, up 9% year over year. The figure was almost in line with the Zacks Consensus Estimate. Total sales included 4.6% comparable growth, 6% from acquisitions and 1.2% adverse impact of the foreign currency translation.

Operating profit increased to $356 million from $313.3 million in fourth-quarter 2017. Selling, administrative and other expenses rose to $1.21 billion from $1 billion a year ago.

For 2018, adjusted earnings per share were $5.68, up from the 2017 figure of $4.71.

For the year, revenues were $18.7 billion, up from the 2017 figure of $16.3 billion.

The Automotive segment’s net sales improved to $2.58 billion from the year-ago figure of $2.1 billion. Moreover, the segment’s operating profit rose to $199.3 million in the reported quarter from $183.2 million a year ago.

The Industrial Parts segment’s net sales rose to $1.57 billion from $1.45 billion in the year-ago quarter. Moreover, operating profit increased to $130.8 million from $116.5 million in the year-ago quarter.

The Business Products segment’s net sales rose to $456.8 million from $449.8 million recorded in the prior-year quarter. Operating profit for the segment increased to $25.9 million from $13.7 million recorded in the prior-year quarter. (Read more: Genuine Parts Q4 Earnings Surpass Estimates, Up Y/Y)

Genuine Parts currently carries a Zacks Rank #3.

4.    Cooper Tire posted adjusted earnings of 66 cents per share in the fourth quarter of 2018, beating the Zacks Consensus Estimate of 56 cents.

The company recorded net sales of $770.5 million, missing the Zacks Consensus Estimate of $773.1 million. However, the top line was higher than the year-ago quarter’s net sales of $757 million.

Operating profit was $24.8 million in the fourth quarter of 2018, down from the year-ago quarter figure of $56.3 million.
 
Americas Tire Operations registered 3% increase in net sales to $664 million. Operating profit in this segment rose 3.1% to $70 million while operating margin remained unchanged at 10.6%.

International Tire Operations registered 7.8% decline in revenues to $149 million. Operating loss was $33 million against operating income of $7 million in the year-ago quarter. Operating margin was a negative 22.2% against a positive 4.6% in the year-ago quarter.

Cooper Tire had cash and cash equivalents of $356 million as of Dec 31, 2018, down from $372 million as of Dec 31, 2017. Capital expenditure decreased to $49 million in the fourth quarter of 2018 from $54 million in the year-ago quarter. (Read more: Cooper Tire Q4 Earnings Beat Estimates, Revenues Miss)

Cooper Tire currently carries a Zacks Rank #3.

5.    Advance Auto Parts reported adjusted earnings of $1.17 per share in fourth-quarter 2018 (ended Dec 29, 2018), up from 77 cents in the prior-year quarter. The figure surpassed the Zacks Consensus Estimate of $1.14. Adjusted operating income increased 11.7% year over year to $127.1 million.

The company reported net revenues of $2.1 billion, almost in line with the Zacks Consensus Estimate. Revenues were 3.3% higher than the year-ago quarter. During the quarter under review, comparable store sales increased 3.4% year over year.

Gross profit was $928.6 million in the reported quarter, higher than the prior-year quarter figure of $873.6 million. Gross Profit margin increased 120 basis points year over year to 44.1%.

Adjusted SG&A expenses totaled $802.4 million compared with $759.9 million in the year-ago period.

For 2018, Advance Auto Parts reported adjusted earnings per share of $7.13, up from the 2017 figure of $5.37.

Revenues in 2018 were $9.6 billion, up from the 2017 figure of $9.4 billion.

Advance Auto Parts had cash and cash equivalents of $896.5 million as of Dec 29, 2018, up from $546.9 million as of Dec 30, 2017. The total long-term debt was $1.05 billion as of Dec 29, 2018, higher than $1.04 billion as of Dec 30, 2017.

In fourth-quarter 2018, operating cash flow was $811 million, up 35% year over year. (Read more: Advance Auto Parts Q4 Earnings Beat Estimates, Up Y/Y)

Advance Auto Parts currently carries a Zacks Rank #3.

Performance

In the last week, Ford Motor Company F gained the maximum while Tesla, Inc. TSLA declined the most.

In the past six months, AutoZone, Inc. AZO has increased the most. Harley-Davidson, Inc. HOG declined the most.

Company Last Week Last 6 Months
GM 2.4% 10.6%
F 6.3% -7.8%
TSLA -1.8% -5.9%
TM 2.6% -0.7%
HMC 2.2% -9.4%
HOG 2.1% -13%
AAP -0.3% 3.3%
AZO 3.3% 21.4%


What’s Next in the Auto Space?

Watch out for the usual news releases and earnings releases over the next week.

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Ford Motor Company (F) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
 
AutoZone, Inc. (AZO) : Free Stock Analysis Report
 
American Axle & Manufacturing Holdings, Inc. (AXL) : Free Stock Analysis Report
 
BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
 
Cooper Tire & Rubber Company (CTB) : Free Stock Analysis Report
 
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