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Auto Stock Roundup: GM & BWA Beat on Q1 Earnings, GPC Misses

Zacks Equity Research

Last week, a host of auto companies reported quarterly numbers. Most of them witnessed a decline in earnings and revenues due to low demand for vehicles and weak consumer confidence amid the COVID-19 pandemic. Nonetheless, some of them managed to deliver an earnings beat despite coronavirus woes. U.S. auto biggie General Motors came up with better-than-expected earnings on the back of solid contribution from the North American segment.

Meanwhile, various carmakers are contemplating resumption of operations in the United States. Ford plans to restart production and operations in North America on May 18 using a phased approach. Honda will gradually ramp up operations at its factories in the United States and Canada from today. General Motors also plans to resume production from May 18 at the majority of its manufacturing plants in North America.

(Read the Last Auto Stock Roundup here)

Recap of the Week’s Most Important Stories

1. General Motors GM reported adjusted earnings of 62 cents per share for first-quarter 2020, surpassing the Zacks Consensus Estimate of 18 cents. Stronger-than-expected contribution from the North American segment led to the outperformance. However, the bottom line declined 56% from the year-ago figure of $1.41 a share. The top U.S. carmaker reported revenues of $32,709 million, topping the Zacks Consensus Estimate of $32,587 million. However, the top line decreased from the year-ago figure of $34,878 million. The automaker’s global market share was 7.9% in the reported quarter, reflecting a decline from 8.3% in the year-ago period. The firm has put the brakes on quarterly cash dividend and suspended the share-repurchase program, citing the uncertainty caused by the coronavirus pandemic. (General Motors Q1 Earnings Beat on Solid GMNA Segment)

2. Genuine Parts Company GPC reported adjusted earnings of 92 cents per share in first-quarter 2020, missing the Zacks Consensus Estimate of $1.12. The bottom line also declined from the year-ago profit of $1.28 a share. The firm reported net sales of $4.56 billion, missing the Zacks Consensus Estimate of $4.61 billion. The top line also decreased 3.8% year over year. Genuine Parts returned $207 million to shareholders during the March-end quarter, including $111 million in the form of quarterly dividends and $96 million in share repurchases. However, the company suspended the existing share-repurchase program until further notice amid the coronavirus crisis. Genuine Parts scrapped its full-year 2020 guidance as it expects the pandemic’s impact to strain the company’s operations. (Genuine Parts Q1 Earnings & Revenues Miss Estimates)

3. CNH Industrial N.V. CNHI posted first-quarter 2020 adjusted loss per share of 6 cents against the Zacks Consensus Estimate of earnings of 7 cents per share. In the prior-year quarter, adjusted earnings were 18 cents per share. Consolidated revenues declined 15% from the year-ago quarter level to $5,461 million, missing the Zacks Consensus Estimate of $5,751 million. The company’s debt was $23.52 billion as of Mar 31, 2020 compared with $24.85 billion on Dec 31, 2019.CNH Industrial suspended quarterly cash dividend due to the coronavirus pandemic-related uncertainties. The company also withdrew 2020 annual view. (CNH Industrial Q1 Earnings & Revenues Miss Estimates)

4. Group 1 Automotive, Inc. GPI reported adjusted earnings per share of $1.66 in first-quarter 2020, beating the Zacks Consensus Estimate of $1.05. Higher-than-expected revenues from new and used vehicles led to the outperformance. The bottom line, however, declined from the prior-year quarter’s $2.06 per share. Revenues of $2.69 billion fell 4.2% year over year. The top line, however, beat the Zacks Consensus Estimate of $2.35 billion.Amid coronavirus-led uncertainty, Group 1 refrained from providing any guidance. Depressed demand for vehicles amid weak consumer confidence is expected to reflect on its second-quarter results. The firm expects the service business to recover more quickly than vehicle sales. (Group 1 Q1 Earnings & Sales Top Estimates, Down Y/Y)

5. BorgWarner Inc. BWA delivered adjusted earnings of 77 cents per share in first-quarter 2020, beating the Zacks Consensus Estimate of 49 cents. The reported figure was lower than the year-ago quarter’s $1 per share. BorgWarner’s net sales declined 11.2% year over year to $2,279 million on account of unfavorable impact of foreign-currency fluctuations. The reported figure, however, beat the Zacks Consensus Estimate of $2,014 million.For full-year 2020, the company projects net sales of $7.25-$8 billion, down from the previous guidance of $9.75-$10.07 billion. Free cash flow is expected in the band of $100-$300 million for 2020, marking a decline from the prior guidance of $675-$725 million. Moreover, full-year operating cash flow is expected in the range of $530-$780 million. (BorgWarner's Q1 Earnings & Revenues Surpass Estimates)

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 week, all the stocks have rallied, with General Motors being the maximum gainer. In the past six months, all the stocks except Tesla have witnessed a decline.

What’s Next in the Auto Space?

Watch out for further impact of the pandemic on the auto sector. Investors in the auto sector are keenly awaiting quarterly results of Japan-based auto giants such as Toyota Motor TM and Honda Motor HMC that are scheduled to release on May 12.

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BorgWarner Inc (BWA) : Free Stock Analysis Report
Honda Motor Co Ltd (HMC) : Free Stock Analysis Report
Toyota Motor Corporation (TM) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Genuine Parts Company (GPC) : Free Stock Analysis Report
Group 1 Automotive Inc (GPI) : Free Stock Analysis Report
CNH Industrial NV (CNHI) : Free Stock Analysis Report
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