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Auto Stock Roundup: TM Beats on Q4 Earnings, HMC Incurs Loss & More

Zacks Equity Research

The U.S. auto industry is gradually returning to life after a multi-week shutdown in an effort to contain the coronavirus pandemic. Most of the vehicle assembly plants are scheduled to resume operations from today. Both domestic and foreign carmakers, which had closed plants, will finally start reopening their production lines as states start easing restrictions in a bid to restart the economy. The Big Three Detroit carmakers — General Motors, Ford and Fiat Chrysler — are set to reopen North American factories on May 18 to ramp up production.  Meanwhile, Japan-based auto giants — Toyota and Honda — reported fourth-quarter fiscal 2020 numbers last week.

(Read the Last Auto Stock Roundup here)

Recap of the Week’s Most Important Stories

Toyota Motor TM posted fiscal fourth-quarter 2020 earnings of 45 cents per ADR against the Zacks Consensus Estimate of a loss of a penny. However, the bottom line compared unfavorably with the year-ago earnings of $2.89 a share. Consolidated revenues came in at $65,190.6 million, surpassing the consensus mark of $63,257 million. However, the top line declined 7.3% year over year. The auto giant expects coronavirus to deal a major blow to earnings and sales in fiscal 2021. Toyota expects operating income to decline 79.5% year over year to ¥500 billion, which would mark the lowest profit in nine years. Sales are expected to total ¥24 billion, indicating a 19.8% decline from fiscal 2020 levels. (Toyota Tops Q4 Earnings Estimates, Cautions on Road Ahead)

Honda Motor HMC incurred fiscal fourth-quarter 2020 loss of 16 cents per ADR against the Zacks Consensus Estimate of earnings of 28 cents. The reported figure widened from the year-ago quarter’s loss of 7 cents per share. The firm’s revenues declined 13.6% year over year to $31,752 million, which surpassed the Zacks Consensus Estimate of $31,727 million. The company announced a quarterly dividend of ¥28 per share for shareholders. Total annual dividend per share to be paid for fiscal 2020 will be ¥112. Amid coronavirus-induced uncertainty and financial crisis, Honda refrained from providing any dividend forecast and financial outlook for fiscal 2021. (Honda Incurs Q4 Loss Amid Coronavirus-Led Low Sales)

AutoNation Inc. AN reported first-quarter 2020 adjusted earnings of 91 cents per share, which beat the Zacks Consensus Estimate of 70 cents on the back of higher-than-expected revenues. However, the reported figure declined from the year-ago quarter’s $1.05 per share. Heightened coronavirus woes and the enforcement of stay-at-home orders — especially in March — dented vehicle demand, in turn hurting the automotive retailer’s year-over-year performance. During the reported quarter, AutoNation’s revenues amounted to $4,667 million compared with $4,981.8 million recorded in the prior-year period. However, the top line surpassed the Zacks Consensus Estimate of $4,555 million. (AutoNation Tops Q1 Earnings Estimates, Halts Buyback)

Penske Automotive Group, Inc. PAG suspended quarterly cash dividend on coronavirus scare. It is a constructive step to boost the firm’s cash position and preserve financial flexibility in the face of rising global market uncertainty. The company stated that the dividend suspension will help it to preserve $34 million cash in second-quarter 2020. Penske paid out a dividend of 42 cents per share for the 35th consecutive quarter in March. (Penske Suspends Quarterly Dividend on Coronavirus Crisis)

Tesla Inc. TSLA plans to roll out the new million-mile battery, in collaboration with Contemporary Amperex Technology Ltd (CATL), at the earliest this year or in 2021 for its Model 3 in China. The battery prices are expected to be $100/kWh, the level at which electric vehicles (EVs) reach rough parity with internal combustion competitors.These batteries will rely on technologies such as low-cobalt and cobalt-free battery chemistries, and the use of chemical additives, materials and coatings. This will minimize internal stress and help the batteries to store more energy for a longer period of time. The technology will likely be used not just in its cars but also for storage in the energy business. (Tesla Racing To Give Gasoline Cars A Run For Their Money)

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 declined, apart from Advance Auto Parts and AutoZone. In the past six months, all the stocks except Tesla have declined.

What’s Next in the Auto Space?

Watch out for further impact of the COVID-19 pandemic on the auto sector. Investors in the auto sector are awaiting the quarterly results of Advance Auto Parts AAP, scheduled to release tomorrow.

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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
 
Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report
 
Toyota Motor Corporation (TM) : Free Stock Analysis Report
 
AutoNation, Inc. (AN) : Free Stock Analysis Report
 
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
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