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Auto Stock Roundup: Tesla to Discontinue Cheapest Model S, Winnebago Q2 Earnings Top

Zacks Equity Research

The auto sector witnessed mixed developments over the last week. Tesla, Inc. TSLA decided to remove the lowest version of its Model S from its lineup, which increased the starting range of the model.

Winnebago Industries, Inc. WGO recorded better-than-expected adjusted earnings and revenues in the second quarter of fiscal 2017. Lear Corporation LEA was selected by the Wyoming Department of Transportation as a partner to supply advanced vehicle parts.

While Toyota Motor Corporation TM revealed investments plans in the U.K., AutoZone, Inc. AZO increased its authorized share buyback program.

(Read the previous roundup here: Auto Stock Roundup for Mar 16, 2017)

Recap of the Week’s Most Important Stories

1. Tesla conveyed its decision to remove the Model S 60 version vehicle from its lineup. The base model for the sedan will now be the 75 kWh version, priced $6,500 higher. The Model S 60 kWh version has the same battery as the 75 kWh version. However, a software limits the battery usage to 80%, which customers have the option to unlock by paying a price.

Tesla has claimed that most customers who purchased the Model S 60 kWh version unlocked the software to 75 kWh. To ease the ordering process for consumers, the company has decided to eliminate the 60 kWh version. (Read More: Tesla to Discontinue Model S 60 Sale from April)

Tesla carries a Zacks Rank #3 (Hold).

2. Winnebago recorded adjusted earnings of 46 cents per share in the second quarter of fiscal 2017 (ended Feb 25, 2017), 31.4% higher than the 35 cents earned in the prior-year quarter. Also, the figure surpassed the Zacks Consensus Estimate by a penny. Revenues in the quarter rose 64.2% to $370.5 million from $225.7 million in the prior-year quarter, which also outpaced the Zacks Consensus Estimate.

The upside in the top line was driven by strong growth of the Towable business, partially offset by modest decline in Motorized revenues. The company’s margins also improved due to the acquisition of Grand Design. The quarter marked the first full quarter of Grand Design being a part of the company. (Read More: Winnebago Beats Q2 Earnings and Revenue Estimates)

Winnebago carries a Zacks Rank #3 (Hold).

3. Despite the economic uncertainty surrounding U.K., Toyota announced that it will be investing around GBP 240 million ($294 million) in the region. The investment will be utilized for upgrading Toyota’s plant in Burnaston. Although the investment reaffirms the company’s confidence in the country, it believes access to the European market is very important for future success.

Toyotacarries a Zacks Rank #3 (Hold).

4. Lear has been selected by the Wyoming Department of Transportation (WYDOT) as its exclusive partner to supply advanced vehicle-to-vehicle and vehicle-to-infrastructure Road Side Units as well as On-Board Units. The WYDOT is focused on highway driving and trucks operating under unfavorable weather conditions. Along with the supply of all related safety applications to the program, the company's E-Systems will provide its Locomate Roadstar product, which has been designed to withstand harsh conditions.

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

5. AutoZone increased its authorized share buyback by $750 million. This authorization is in addition to the company’s ongoing repurchase program. Including this new authorization, the company’s board has authorized a total of $18.7 billion for buying back shares since 1998.

AutoZone carries a Zacks Rank #3 (Hold).

Performance

Auto stocks recorded a mixed performance last week. General Motors Company GM lost the maximum among the stocks listed below, while Harley-Davidson, Inc. HOG was the biggest gainer.

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

 

Company

Last 1-Week Period

Last 6 Months

GM

-7.7%

+7.1%

F

-6.1%

-3.3%

TSLA

+3.3%

+22.9%

TM

-0.9%

-5.8%

HMC

-1.0%

+3.8%

HOG

+3.4%

+15.3%

AAP

-2.5%

+1.4%

AZO

+1.1%

-2.6%

Auto-Tires-Trucks Sector 5YR % Return

 

Auto-Tires-Trucks Sector 5YR % Return

 

What’s Next in the Auto Space?

Lear is scheduled to pay its hiked quarterly dividend. Volkswagen is set to re-enter the bond market and issue new debt for the first time post the emission scandal. Further findings of French prosecutors in relation to cheating in diesel emission tests by Fiat Chrysler are expected to be revealed.

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Tesla Inc. (TSLA): Free Stock Analysis Report
 
Toyota Motor Corp Ltd Ord (TM): Free Stock Analysis Report
 
AutoZone, Inc. (AZO): Free Stock Analysis Report
 
Lear Corporation (LEA): Free Stock Analysis Report
 
Winnebago Industries, Inc. (WGO): Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG): Free Stock Analysis Report
 
General Motors Company (GM): Free Stock Analysis Report
 
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