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Auto Stock Roundup: F, ORLY, CMI & Others Deliver Q3 Earnings Beat

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Rimmi Singhi
·5 min read
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In the past week, many auto companies (including five S&P 500 auto stocks) came out with quarterly numbers and delivered better-than-anticipated results amid gradual recovery of vehicle demand and related parts. All the five S&P 500 auto stocks — namely Ford F, BorgWarner BWA, Cummins CMI, O’Reilly Automotive ORLY and LKQ Corp LKQ — that released results last week managed to surpass earnings estimates. This continues the momentum of two S&P 500 auto firms, PACCAR PCAR and Genuine Parts GPC, which delivered earnings beat last to last week.

Earnings Snapshots of Key Auto Players

Harley-Davidson (HOG) reported third-quarter 2020 financial results, delivering the strongest third-quarter net income since 2015. This reflects the initial positive impact of management’s The Rewire efforts. Remarkably, the firm managed to yield profits in the third quarter against the loss of 60 cents per share posted in the prior quarter. It recorded third-quarter 2020 adjusted earnings of 78 cents per share, which handily surpassed the Zacks Consensus Estimate of 22 cents.Harley-Davidson expects 2020 cash savings of $250 million, including SG&A and capital expenditure reductions under the Rewire plan. (Harley-Davidson Registers Profit in Q3 on Rewire Strategy)

Ford reported third-quarter 2020 adjusted earnings of 65 cents per share, which comfortably outpaced the Zacks Consensus Estimate of 22 cents.The bottom line also surged 91.2% from the year-ago profit of 34 cents per share.For the reported quarter, the company generated automotive revenues of $34,707 million. The figure outpaced the Zacks Consensus Estimate of $32,700 million and was higher than the prior-year quarter’s $33,931 million.Ford anticipates fourth-quarter adjusted EBIT between break-even and a $500-million loss, indicating a decline from both the third quarter and the year-ago period. (Ford's Q3 Earnings & Sales Surpass Estimates, Up Y/Y)

BorgWarner reported adjusted earnings of 88 cents per share for third-quarter 2020, which beat the Zacks Consensus Estimate of 75 cents. However, the bottom line declined 8.3% from the year-ago profit of 96 cents per share. This automotive equipment supplier reported net sales of $2,534 million, which outpaced the Zacks Consensus Estimate of $2,378 million. Moreover, the top-line figure was 2% higher than the year-ago quarter’s $2,492 million.For the ongoing quarter, net sales are expected in the range of $3.46-$3.61 billion. Also, adjusted operating margin is projected at 8.8-9.6%. (BorgWarner's Q3 Earnings Top Estimates, Guidance Up)

Cummins reported third-quarter 2020 earnings of $3.57 per share, which surpassed the Zacks Consensus Estimate of $2.41.The bottom line, however, declined from third-quarter 2019 earnings of $3.83 a share amid coronavirus woes. Cummins’ revenues also declined 11.3% year over year to $5,118 million. However, revenues beat the Zacks Consensus Estimate of $4,473.1 million. Cummins’ cash and cash equivalents were $2,967 million as of Sep 27, 2020, up from $1,129 million on Dec 31, 2019. Long-term debt totaled $3,609 million, up from $1,576 million on Dec 31, 2019. The firm expects fourth-quarter 2020 revenues to be on par with the third-quarter level. (Cummins' Q3 Earnings & Sales Top Estimates, Down Y/Y)

O’Reilly reported third-quarter 2020 earnings per share of $7.07, which surpassed the Zacks Consensus Estimate of $6.34.Remarkable comparable store sales growth drove this outperformance. Comps grew 16.9% year on year, outpacing the Zacks Consensus Estimate of 9%. The bottom line also increased 39.1% year over year. This U.S.-based specialty retailer of automotive parts registered quarterly revenues of $3,207.6 million, which topped the consensus mark of $2,978 million. Moreover, the top line was higher than the prior-year level of $2,666.5 million.Free cash flow jumped 51.2% year over year to $662.8 million from the prior year’s $438.5 million. (O'Reilly's Q3 Earnings Beat on Stellar Comps Growth)

LKQ Corporation (LKQ) reported adjusted earnings of 75 cents per share for third-quarter 2020, which surpassed the Zacks Consensus Estimate of 52 cents.Moreover, the bottom line was higher than the year-ago profit of 61 cents per share. This aftermarket auto parts distributor registered quarterly revenues of $3,047.7 million, which topped the Zacks Consensus Estimate of $2,941 million. However, the top-line figure decreased 3.2% from the year-ago level of $3,147.7 million. For the third quarter, the company generated free cash flow of $188.9 million, down 28% year over year. LKQ Corp. has decided to recommence the share-repurchase program in fourth-quarter 2020. (LKQ Corp's Q3 Earnings Surpass Estimates, Increase Y/Y)

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past six months, all stocks have increased, with Tesla being the maximum gainer. Over the past week, all stocks have declined apart from Harley-Davidson.

What’s Next in the Auto Space?

Investors are keenly awaiting quarterly results of U.S. auto biggie General Motors, and Japan-based car giants Toyota and Honda. Car enthusiasts will be keeping a close watch on October 2020 U.S. car sales, which will be coming out soon. Investors in the auto sector would be closely tracking the monthly sales reports of auto biggies like Honda, Hyundai and Toyota, among many others.

The Hottest Tech Mega-Trend of All

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Ford Motor Company (F) : Free Stock Analysis Report
 
BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Cummins Inc. (CMI) : Free Stock Analysis Report
 
PACCAR Inc. (PCAR) : Free Stock Analysis Report
 
OReilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
LKQ Corporation (LKQ) : Free Stock Analysis Report
 
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