Auto Stock Roundup: Q2 Earnings Miss for GM & F, Beat for PCAR & HOG

Auto sales have been strong so far in 2018. However, industry biggies General Motors (GM) and Ford (F) report an earnings miss.·Zacks

Zacks Equity Research

Updated Thu, Jul 26, 2018, 9:36 AM

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The second-quarter 2018 earnings season is in full swing now, with releases flowing in from the Auto sector. Many of the auto biggies have reported results for the quarter ending on Jun 30, 2018, in the past week.

In 2018, auto industry sales have been trending up on a robust job market and favorable tax measures that have driven consumer demand. According to the latest Earnings Preview, as of Jul 20, auto sector’s earnings are expected to decline 9.7% while revenues are likely to gain 3.5% year over year. The S&P 500 companies are estimated to record a respective 21% and 8.3% year-over-year rise in earnings and revenues in the quarter.

Some important auto companies which have reported quarterly numbers are PACCAR Inc. PCAR, Harley-Davidson Inc. HOG, General Motors Company GM and Ford Motor Company F. While PACCAR and Harley-Davidson delivered an earnings beat in the second quarter, General Motors and Ford reported a miss. General Motors’ results can be attributed to a considerable rise in commodity costs and unfavorable foreign exchange. Ford’s earnings miss may have been caused by challenges in China market and production disruption in North America.

(Read the previous roundup here: Auto Stock Roundup for Jul 19, 2018)

Recap of the Week’s Most Important Stories

1.   Genuine Parts Company GPC reported adjusted earnings of $1.59 per share, beating the Zacks Consensus Estimate of $1.56. Adjusted earnings in the year-ago quarter were $1.29.

The company recorded net income of $227 million in second-quarter 2018, up from $190 million in the prior-year quarter.

Genuine Parts reported net sales of $4.82 billion, up 17.6% year over year. The figure surpassed the consensus estimate of $4.66 billion. The rise was driven by acquisitions and improved organic sales. Total sales included 3% comparable growth, 14% from acquisitions — including Alliance Automotive Group (“AAG”) — and 0.5% benefit from the foreign currency translation.

Operating profit increased to $390.2 million from $349.2 million in second-quarter 2017. Selling, administrative and other expenses rose to $1.16 billion from $903.3 million a year ago. (Read more: Genuine Parts’ Q2 Earnings & Revenues Top Estimates)

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

2.   Gentex Corporation GNTX reported second-quarter 2018 earnings per share of 40 cents, missing the Zacks Consensus Estimate by a penny. However, the bottom line was higher than the year-ago quarter’s 31 cents.

Reported net sales of $455 million missed the consensus mark of $473 million. However, it was higher than net sales of $443.1 million in second-quarter 2017. When compared with the company’s mid-April forecast of HIS for second-quarter 2018, the light-vehicle production in North America declined around 3%, leading to lower-than-expected unit shipments and revenues.

Net income in second-quarter 2018 rose 23% to $109 million from $88.5 million a year ago. (Read more: Gentex's Q2 Earnings and Revenues Miss, Rise Y/Y)

Gentex currently carries a Zacks Rank #3.

3.   Harley-Davidson reported adjusted earnings of $1.45 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $1.35. In the prior-year quarter, the figure was $1.48.

Net income decreased to $242.3 million from $258.9 million a year ago.

Revenues from Motorcycle and Related Products declined to $1.53 billion in the reported quarter from $1.58 billion in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of $1.42 billion. The company also reported consolidated revenues of $1.71 billion, down from the prior-year figure of $1.77 billion.

Operating income from Motorcycles and Related Products declined to $243 million from $317 million recorded a year ago. This was primarily due to lower shipments, higher operating expenses and costs associated with the manufacturing optimization initiative.

For the quarter ending Jul 1, the company shipped 72,593 motorcycles compared with 81,807 in second-quarter 2017. (Read more: Harley-Davidson Q2 Earnings Top Estimates, Fall Y/Y)

Harley-Davidson currently carries a Zacks Rank #5 (Strong Sell).

4. PACCAR’s second-quarter 2018 adjusted earnings were $1.59 per share, up from $1.06 in the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $1.43 on robust global truck deliveries and parts sales.

The company posted quarterly consolidated net sales and revenues of $5.81 billion. Adjusted revenues totaled $5.47 billion. The Zacks Consensus Estimate for revenues was pegged at $5.43 billion.

Revenues from the Truck, Parts and Other segment increased to $5.47 billion in second-quarter 2018 from $4.40 billion in second-quarter 2017. The segment’s pre-tax income increased to $632.6 million from $467.9 million recorded a year ago.

Revenues from the Financial Services segment rose to $338 million from $306.3 million a year ago. Pre-tax income increased to $72.4 million from $62.4 million in the year-ago quarter. (Read more: PACCAR Earnings and Revenues Beat Estimates in Q2)

PACCAR currently carries a Zacks Rank #3.

5. General Motors reported second-quarter 2018 adjusted earnings per share of $1.81, down 4.2% from the prior-year quarter. The bottom line lagged the Zacks Consensus Estimate of $1.84. Significant rise in commodity costs and unfavorable foreign exchange affected the results.

General Motors reported revenues of $36.8 billion, down 0.6% from the year-ago quarter. Revenues also lagged the Zacks Consensus Estimate of $37 billion.

During the last reported quarter, total sales for the wholesale unit declined to 1.20 million from 1.21 million in the second quarter of 2017. Worldwide retail-unit sales decreased to 2.06 million from 2.34 million in the year-ago quarter. The automaker’s global market share was 8.6% during the reported quarter, reflecting a decline from 10.2% in the year-ago quarter. (Read more: General Motors' Q2 Earnings & Revenues Miss Estimates)

General Motors currently carries a Zacks Rank #2 (Buy).

Performance

Last week, Harley-Davidson’s stock recorded the strongest rally, while shares of Tesla, Inc. TSLA declined the maximum.

In the past six months, share prices of all these stocks have declined, except Advance Auto Parts, Inc. AAP. In fact, Harley-Davidson has lost the most.

Company	Last Week	Last 6 Months
GM	-5.6%	-12.4%
F	-1.9%	-5.4%
TSLA	-11.7%	-5.1%
TM	0.1%	-5.2%
HMC	1.2%	-17.1%
HOG	7.1%	-18.4%
AAP	0.4%	14.3%
AZO	1.7%	-10.3%

What’s Next in the Auto Space?

Watch out for the usual news releases as well as earnings releases of auto companies over the next week.

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