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Auto Stock Roundup: TSLA, GPC & ORLY Earnings Miss, HOG & ALSN Report a Beat

Zacks Equity Research
In a bid to win solid market share and capitalize on robust truck demand, auto giants are flooding the market with redesigned and efficient versions of pickup trucks.

Several companies from the Zacks Auto sector — including Genuine Parts Company GPC, Harley-Davidson, Inc. HOG, Allison Transmission Holdings Inc. ALSN, O’Reilly Automotive Inc. ORLY and Tesla, Inc. TSLA — came out with first-quarter 2019 results in the past week.

Tesla, O’Reilly Automotive and Genuine Parts’s earnings and sales missed quarterly estimates. Further, Harley-Davidson’s earnings beat estimates while revenues lagged. However, in the reported quarter, Allison Transmission’s earnings and revenues beat.

Recap of the Week’s Most Important Stories

1.    Genuine Parts reported adjusted earnings of $1.28 per share in first-quarter 2019 compared with $1.27 in the prior-year quarter. The bottom line missed the Zacks Consensus Estimate of $1.31. During the reported quarter, it witnessed positive comps across three business segments.

The company recorded net income of $160.3 million in first-quarter 2019, down from $176.6 million in the prior-year quarter.

Genuine Parts reported net sales of $4.74 billion, up 3.3% year over year. The figure missed the Zacks Consensus Estimate of $4.8 billion. Net sales included 3.3% comparable growth, roughly 2% from acquisitions, partly offset by 2% adverse impact of foreign currency translation.

Operating profit increased to $321 million from $318.5 million in first-quarter 2018. Selling, administrative and other expenses rose to $1.2 billion from $1.1 billion a year ago.

The Automotive segment’s net sales improved to $2.62 billion from the year-ago figure of $2.56 billion. However, the segment’s operating profit declined to $179.2 million in the reported quarter from $184.7 million a year ago.

The Industrial Parts segment’s net sales rose to $1.64 billion from $1.55 billion in the year-ago quarter. Moreover, operating profit increased to $121 million from $112 million in the year-ago quarter.

The Business Products segment’s net sales rose to $479 million from $474.1 million recorded in the prior-year quarter. Operating profit for the segment declined to $21.2 million from $21.6 million recorded in the prior-year quarter.
(Read more: Genuine Parts Q1 Earnings Miss Estimates, Rise Y/Y)

Genuine Parts currently carries a Zacks Rank #4 (Sell).

2.    Harley-Davidson’s adjusted earnings per share were 98 cents in first-quarter 2019, which surpassed the Zacks Consensus Estimate of 67 cents. In the prior-year quarter, the figure was $1.24 per share.
The company’s net income was $127.9 million compared with $174.8 million registered a year ago.

Revenues from the Motorcycle and Related Products segment declined 12.3% year over year to $1.2 billion in the reported quarter, which missed the Zacks Consensus Estimate of $1.22 billion. The company reported consolidated revenues of $1.38 billion, marking a decline from the prior-year quarter’s $1.54 billion. This fall was majorly due to declining worldwide retail unit sale.

In first-quarter 2019, operating income from the Motorcycles and Related Products segment was $108.4 million compared with operating income of $172.8 million in the year-ago quarter. This fall in income was due to lower revenues, unfavorable product mix and increased tariffs.

In the quarter ending on Mar 31, the company shipped 58,891 motorcycles compared with 63,944 in first-quarter 2018.

Harley-Davidson’s retail motorcycle units sold in the United States declined 4.2% to 28,091. International units sold declined 3.3% to 21,060 motorcycles from 21,777 in the prior-year quarter. During the reported quarter, sales across all the markets experienced declines. Sales in the Middle East and Africa (EMEA), the Asia Pacific, Latin America, and Canada declined 0.6%, 4%, 10.6% and 6.3%, respectively.

Harley-Davidson’s worldwide retail motorcycle units sold declined 3.8% to 49,151 from 51,086 in the year-ago quarter.

Revenues from the Parts & Accessories segment decreased 5.5% to $159.7 million. Moreover, the metric for General Merchandise — including MotorClothes apparel and accessories — lost 2.1% to $55.4 million. (Read more: Harley-Davison Q1 Earnings Beat Estimates, Down Y/Y)

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

3.    Allison Transmission’s first-quarter 2019 earnings were $1.32 per share, beating the Zacks Consensus Estimate of $1.11. In the year-ago quarter, the bottom line was $1.08 per share. Net income in the quarter under review was $167 million compared with $151 million in first-quarter 2018.

In the reported quarter, net sales rose 2% year over year to $675 million. Moreover, it outpaced the Zacks Consensus Estimate of $646 million. Favorable demand outside North America Off-Highway and North America On-Highway end markets led to rise in sales.

Gross profit increased 5% year over year to $359 million while gross margin was 53.2% compared with 51.6% recorded in the same period of 2018. This rise in gross profit was primarily driven by reduction in expenses related to the retirement incentive program, improved net sales, price increases on certain products and lower incentive compensation expenses.

Net sales for the North America On-Highway end market increased 11% to $377 million, driven by higher demand for rugged duty series and highway series models.

Net sales for the North America Off-Highway end market declined $19 million to $14 million. This fall was due to lower demand from hydraulic fracturing applications.

Net sales for the Defense end market went down 14% to $32 million, driven by lowered tracked vehicle demand.

The Outside North America On-Highway end market’s net sales increased 3% to $94 million, owing to higher demand in Europe.

Net sales for the Outside North America Off-Highway end market increased $15 million to $27 million in first-quarter 2019, driven by improved demand in the energy sector.

Net sales for the Service Parts, Support Equipment & Other end market decreased 13% to $131 million, owing to lower demand for North America service parts. (Read more: Allison Q1 Earnings Drive Past Estimates, Rise Y/Y)

Allison Transmission currently carries a Zacks Rank #3.

4.    O’Reilly Automotive’s adjusted earnings per share were $4.05 in first-quarter 2019, marking 12% rise from $3.61 in the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $4.06.

During the reported quarter, net income improved 5% to $321 million (13.3% of sales) from $305 million (13.4% of sales) recorded in the year-ago period.

The company’s quarterly revenues rose 6% year over year to $2.41 billion, missing the Zacks Consensus Estimate of $2.44 billion.

Gross profit went up 6% to $1.28 billion (or 53.1% of sales) from $1.2 billion (or 52.6% of sales) reported in the year-ago quarter. Selling, general and administrative expenses rose 7% year over year to $835 million (34.6% of sales) from $778 million (34.1% of sales) in first-quarter 2018. Operating income increased 5% to $445 million (or 18.5% of sales) from $423 million (or 18.5% of sales) reported a year ago.

O’Reilly Automotive opened 64 stores in first-quarter 2019. The total store count was 5,306 as of Mar 31, 2019, compared with 5,097 in the last year. Sales per weighted-average store increased to $452,000 from $447,000 in the prior-year quarter.

O’Reilly Automotive currently carries a Zacks Rank #3.

5.    Tesla reported loss per share of $2.90 in first-quarter 2019, wider than the Zacks Consensus Estimate of loss of $1.21. The company recorded loss of $3.35 per share in the prior-year quarter.

During the reported quarter, net loss attributable to common shareholders amounted $702.1 million compared with the year-ago net loss of $709.6 million.

Revenues increased to $4.5 billion from $3.4 billion registered in first-quarter 2018. However, the figure missed the Zacks Consensus Estimate of $5.8 billion.

During the quarter under review, Tesla’s vehicle production and delivery numbers registered sequential declines of 10.9% and 31%, respectively. The company managed to produce around 77,100 vehicles — consisting of 62,950 Model 3, and 14,150 Model S and X. Out of the total delivered figure of 63,000 units, Model 3 accounted for 50,900 while Model S and X were 12,100.

Total automotive revenues, including revenues from automotive sales and leasing, increased 36% year over year to $3.7 billion in the reported quarter.

Energy generation and storage revenues decreased from $410 million in first-quarter 2018 to $324.7 million in the reported quarter. This decline was mainly due to lower solar deployments.

Services and other revenues increased 87.1% year over year to $492.9 million.

Tesla’s first-quarter 2019 automotive gross margin was 20.2%, increasing 43 basis points (bps) from first-quarter 2018.

Energy generation and storage gross margin decreased 606 bps on a year-over-year basis to 2.4%.

Tesla currently carries a Zacks Rank #5 (Strong Sell).

Performance

Last week, all these stocks, except for Ford Motor Company F, declined in value. The highest decline was recorded by Harley-Davidson. AutoZone, Inc. AZO increased the most.

Company Last Week Last 6 Months
GM -0.7% 21.6%
F 0.7% 6.6%
TSLA -4.6% -21.8%
TM -1% 4.8%
HMC -2.3% 3.5%
HOG -7.9% 5%
AAP -2.8% 4.4%
AZO -0.8% 40.2%


What’s Next in the Auto Space?

Watch out for the usual news releases and the earnings releases over the next week.

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Ford Motor Company (F) : Free Stock Analysis Report
 
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O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
 
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