U.S. Markets closed

Auto Stock Roundup: China February Sales Up, GM Sells Opel, Tesla Expands in Solar

Zacks Equity Research

Major U.S. automakers are performing relatively well in China with Ford Motor Company F and General Motors Company GM reporting an improvement in year-over-year sales in Feb 2017.

General Motors also announced the sale of its loss-making European business to PSA Group this week while Penske Automotive Group, Inc. PAG is continuing with its acquisition spree.

Among other developments, Tesla, Inc. TSLA unveiled a vast solar farm in Hawaii, which will be able to provide solar energy even at night. Meanwhile, Thor Industries, Inc. THO reported second-quarter fiscal 2017 earnings which missed estimates, while revenues beat the same.

(Read the previous roundup here: Auto Stock Roundup for Mar 2, 2017)

Recap of the Week’s Most Important Stories

1. General Motors signed an agreement for the sale of its European businesses, including the loss-making Opel/Vauxhall business, with French-automaker, PSA Group. General Motors will receive €2.2 billion (around $2.3 billion) from the deal, which is expected to close by end 2017. With the sale, the company aims to focus on its core automotive business, develop new technologies and boost share buybacks (read more: General Motors to Sell European Business for $2.3B).

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

2. Thor Industries reported second-quarter fiscal 2017 (ended Jan 31, 2017) earnings of $1.23 per share that missed the Zacks Consensus Estimate of $1.26. However, net income from continuing operations increased 45.6% to $64.8 million from $45.2 million in the prior-year quarter. Revenues rose 62.9% year over year to a second-quarter record of $1.59 billion, surpassing the Zacks Consensus Estimate of $1.51 billion, driven by organic growth and benefits from the Jayco acquisition.

Thor Industries will be focusing on production capacity expansion in the second half of 2017, with capital expenditures projected at $80 million for the remaining year. Total capital expenditure in fiscal 2017 is projected at $130 million (read more: Thor Industries Earnings Miss, Revenues Beat in Q2).

Thor Industries carries a Zacks Rank #3 (Hold).

3. Penske Automotive has expanded its presence in the U.S. with the acquisition of the Jaguar and Land Rover dealerships in Paramus, NJ. The company expects to generate annual revenues of $215 million from this acquisition. Penske Automotive currently operates five Jaguar/Land Rover dealerships in the country. With the latest acquisitions, the company aims to expand its portfolio and presence in the region.

Penske Automotive carries a Zacks Rank #3.

4. Tesla’s Energy division unveiled a major solar farm and energy storage project on the Kauai island in Hawaii. The project, spread over 50 acres, will be able to provide solar power even at night. Per the storage system, Tesla’s 52-megawatt-hour Powerpack lithium-ion battery will store energy during the day and will be able to distribute it even after the sun goes down. The project comprises almost 55,000 solar panels and 272 Telsa Powerpacks. The Kauai Island Utility Cooperative has a 20-year power purchase agreement to buy power from the project at 13.9 cents per kilowatt-hour (read more: Tesla Unveils Major Solar Project on Kauai Island, Hawaii).

Tesla carries a Zacks Rank #3.

5. Ford saw 2% higher sales in China in Feb 2017 from Feb 2016, selling 64,641 units in the month. However, year-to-date sales of 153,073 vehicles fell 2% year over year. The company’s largest vehicle segment in the country, CAF, saw a sales decline of 12% and 32% year over year in the month and year to date, respectively. This was primarily because of the company’s focus on building order banks in the first quarter after a strong close in 2016.

Ford carries a Zacks Rank #3.

Meanwhile, General Motors and its joint ventures in China reported a 0.4% year-over-year increase in sales for Feb 2017, taking the figure to 246,730 vehicles. The company’s Cadillac and Baojun models set February delivery records in the month.

Performance

Auto stocks recorded a relatively negative performance last week. AutoZone, Inc. AZO lost the maximum among the stocks listed below, while Harley-Davidson, Inc. HOG was the sole gainer.

Over the last six months, Tesla has been the biggest gainer, while Tata Motors was the worst performer.

Company

Last 1-Week Period

Last 6 Months

GM

-0.4%

+22.3%

F

-1.3%

+1.2%

TSLA

-1.3%

+27.0%

TM

-2.6%

-5.8%

HMC

-1.1%

+2.8%

HOG

+0.2%

+15.7%

AAP

-0.9%

+1.5%

AZO

-2.9%

-0.7%

 

Auto-Tires-Trucks Sector 5YR % Return

 

Auto-Tires-Trucks Sector 5YR % Return

What’s Next in the Auto Space?

A few automakers will be reporting their Europe auto sales numbers for Feb 2017. A decision by the Environmental Protection Agency regarding the reversal of the federal fuel-economy requirements is also expected soon.

Now See Our Private Investment Ideas

While the above ideas are being shared with the public, other trades are hidden from everyone but selected members. Would you like to peek behind the curtain and view them? Starting today, for the next month, you can follow all Zacks' private buys and sells in real time from value to momentum . . . from stocks under $10 to ETF and option moves . . . from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors. Click here for Zacks' secret trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report
 
Ford Motor Company (F): Free Stock Analysis Report
 
Tesla Inc. (TSLA): Free Stock Analysis Report
 
AutoZone, Inc. (AZO): Free Stock Analysis Report
 
Thor Industries, Inc. (THO): Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG): Free Stock Analysis Report
 
General Motors Company (GM): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research