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Auto Stock Roundup: Quarterly Results of NIO & AZO, Buyout Updates From LAD & PAG

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·6 min read
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Last week, various auto biggies released their U.S. sales numbers for the month of February. Japan-based auto giant Toyota reported year-over-year sales decline of 5.7% to 183,051 units. Close peer Honda’s sales also dropped 11.4% to a total of 106,328 units. While sales of Honda (excluding the Acura division) trucks witnessed a 5.7% rise, car sales slumped 33.4%. Other automakers like Hyundai, Kia, Mazda and Subaru witnessed a year-over-year dip in sales for February 2021. U.S. auto biggie Ford recorded a sales decline of 14.1% year over year to 163,520 units. Amid the ongoing coronavirus woes and associated job losses, along with deep freeze in Texas, consumers are likely to have pulled back on spending on big-ticket items.

Meanwhile, we know that the auto industry is currently reeling under chip famine. Last week, U.S. auto giant General Motors extended production stoppage at the San Luis Potosi plant through the end of March. Downtime at Fairfax and CAMI is extended to at least mid-April. Further, operations in the firm’s Gravatai plant in Brazil will remain suspended in April and May.

(Read the Last Auto Stock Roundup here)

Last Week’s Top Stories

Lithia Motors LAD announced the acquisition of the Fink Automotive Group. The buyout supplements Lithia’s existing product portfolio, and aligns with the firm’s plan of fortifying the reach and density of its network to serve customers more conveniently. The transaction further strengthened Lithia’s footprint in the Southeast and is anticipated to add $430 million in annualized revenues. It will also increase the auto retailer’s Southeast region revenues to more than $1 billion. Lithia financed the buyout through capital raised in concurrent equity and debt offerings in late 2020.

AutoZone AZO reported earnings of $14.93 per share for second-quarter fiscal 2021 (ended Feb 13, 2021), up from the prior-year figure of $12.39. The bottom line also surpassed the Zacks Consensus Estimate of $13.07. Net sales of $2,910.8 million increased 15.8% year over year and topped the Zacks Consensus Estimate of $2,747 million.Domestic same-store sales rose 15.2% year over year. The auto retailer — which currently carries a Zacks Rank #3 (Hold) — exited the quarter with 5,951 stores in the United States, 628 in Mexico and 46 in Brazil. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NIO Inc. NIO reported fourth-quarter loss per ADS of 14 cents, in line with the Zacks Consensus Estimate. However, the reported figure narrowed from the year-ago loss of 39 cents per ADS. The China-based EV maker posted revenues of $1,017.8 million, up 148.9% year over year. The top line also surpassed the consensus mark of $742 million. NIO forecasts first quarter 2021 revenues between $1,131.4 million and $1,158.2 million, indicating a year-over-year rise of 490.7% at the midpoint of the guided range.

Penske Automotive PAG inked a deal to buy Kansas City Freightliner, a retailer of medium and heavy-duty commercial trucks. The buyout would expand Penske’s Premier Truck Group (PTG) arm’s scale with the addition of five full-service dealerships, four parts and service centers, as well as two collision centers. The acquisition is likely to generate $450 million in annualized revenues. The transaction — set for closure in second-quarter 2021— will bolster the PTG business with expected annual sales of 20,000 units and revenues of $2.5 billion.

Navistar NAV announced that its shareholders have approved the firm’s acquisition by Volkswagen’s VWAGY truck arm TRATON. The buyout is anticipated to be completed by mid-2021. Following the deal, TRATON — which currently owns a 16.7% stake in Navistar — will become the sole owner of the U.S.-based manufacturer of medium and heavy trucks. Considering Volkswagen’s limited exposure in the North American truck industry, and Navistar’s strong footing in the region along with impressive dealership networks, the deal will fuel the German-based auto giant’s prospects.

Daimler AG DDAIF and the Volvo Group announced the completion of the fuel-cell joint venture to form a new entity called cellcentric GmbH & Co. KG.The Volvo Group has secured a 50% partnership interest in the German auto giant’s arm, Daimler Truck Fuel Cell GmbH & Co. KG for 0.6 billion euros on a cash and debt-free basis. The key goal of the joint venture will be to develop and commercialize fuel-cell systems for use in heavy-duty big-rigs, as well as other applications.

Price Performance

The following table shows the stock movement of a few major auto players over the past week and six-month period.

In the past six months, all stocks have increased barring AutoZone, which has inched down 1%. Last week’s share price display was a mixed bag, with Tesla declining the most and Advance Auto Parts registering maximum gains.

What’s Next in Auto Space?

Investors are awaiting recreational vehicle maker Thor Industries’ quarterly results, set to be reported tomorrow. Also, Commercial Vehicle Group will unveil quarterly numbers on Mar 10. Meanwhile, industry watchers will also track China vehicle sales data for February 2021, which is likely to be released by China Association of Automobile Manufacturers later this week.

Zacks Names “Single Best Pick to Double”

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You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

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Navistar International Corporation (NAV) : Free Stock Analysis Report

Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report

AutoZone, Inc. (AZO) : Free Stock Analysis Report

Daimler AG (DDAIF) : Free Stock Analysis Report

Lithia Motors, Inc. (LAD) : Free Stock Analysis Report

NIO Inc. (NIO) : Free Stock Analysis Report

Volkswagen AG (VWAGY) : Free Stock Analysis Report

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Zacks Investment Research