Per Financial Times, Daimler AG DDAIF will start selling Freightliner Cascadia in North America from this year. Equipped with “level two” software, this partially-automated truck uses information from radar and camera, and can hit the brake, accelerate and steer on its own at any speed.
The launch of this new truck is in sync with Daimler’s pledge to lead the autonomous vehicle market. Off late, the market has been witnessing new entrants to take advantage of growing technology in the auto industry. Apart from the latest launch in 2019, Daimler will also invest €500 million to accelerate autonomous technology for trucks. This investment is expected to create 200 jobs, majorly in the United States. The fund will help the company to remain competitive in the market while developing technology. Further, it will aid Daimler to achieve the aim of developing highly automated vehicles within a decade.
Launching the first partially-automated truck will aid Daimler to gain traction in North America after delivering 500,000 trucks globally in 2018, which marked the highest in a decade. The company’s truck division has been struggling to drive profits, owing to an upsurge in expenses to develop electric and autonomous technology. Further, this latest launch will fuel competition in the region during a time, when the market is forecasted to remain soft.
Daimler AG Price and Consensus
Daimler AG Price and Consensus | Daimler AG Quote
Daimler expects the region’s demand to be strong, similar to the last year. Further, this commercial-vehicle manufacturer expects demand to moderate by the second half of 2019. Per Bloomberg Intelligence estimates, the truck market will reach its top-most level in 2019, since its rising in 2006.
The company’s truck division has been generating profits compared with its other segments. During third-quarter 2018, it sold 136,000 trucks, leading to 9% yearly rise in revenues. In 2018, Daimler expects the truck segment to grow in NAFTA, Brazil, Indonesia and India, thus, adding to its profit margin.
In third-quarter 2018, Daimler’s earnings before interest and tax (EBIT) fell 27% year over year to 2.49 billion euros ($2.85 billion), majorly due to the challenging environment in Europe along with expenses for proceedings related to emission issues in various regions. For 2018, the company expects EBIT to be significantly below the prior-year level.
Over the past month, shares of Daimler have gained 4% against the industry’s decline of 0.4%.
Zacks Rank & Other Key Picks
Daimler currently carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader auto sector are Bridgestone Corporation BRDCY, Advance Auto Parts, Inc. AAP and General Motors Company GM, each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bridgestone has an expected long-term growth rate of 4.7%. Share price of the company has increased 5.1% in the past six months.
Advance Auto has an expected long-term growth rate of 12.1%. Over the past six months, shares of the company have gained 14.3%.
General Motors has an expected long-term growth rate of 8.5%. Shares of the company have gained 5.2% in the past three months.
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