A month has gone by since the last earnings report for American Axle & Manufacturing (AXL). Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is American Axle due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
American Axle Posts Q2 Loss, Tops Sales Estimates
American Axle posted second-quarter 2020 adjusted loss of $1.79 per share, narrower than the Zacks Consensus Estimate of a loss of $2.06 on higher-than-anticipated revenues. Last year, the firm posted profits of 55 cents a share.
The Detroit-based global automotive parts supplier reported revenues of $555 million, which beat the Zacks Consensus Estimate of $411 million. Revenues, however, nosedived 69.7% from the year-ago figure of $1,704.3 million.
The dismal year-over-year performance is attributed to coronavirus-led demand. Per the company, coronavirus woes impacted sales to the tune of $947 million for the quarter under review.
The firm’s Driveline segment recorded sales of $403.7 million, down 65.8% year over year. The unit posted a negative EBITDA of $31.2 million against a positive EBITDA of $162.1 million in the prior-year quarter.
The company’s Metal Forming business generated revenues of $150.3 million, which plunged from the year-ago figure of $484.2 million. The segment incurred a loss of $20.9 million against the prior year’s income of $86.5 million.
American Axle’s second-quarter 2020 SG&A (selling, general & administrative) expenses totaled $73.8 million, down from $91.3 million incurred in the prior-year period.
For the three-month period ended Jun 30, 2020, the company posted negative adjusted free cash flow (FCF) of $161.8 million versus positive adjusted FCF of $119.3 million in the year-earlier period. Capital spending for the quarter came in at $35 million, down from the year-ago period’s $111.9 million.
As of Jun 30, 2020, American Axle had cash and cash equivalents of $893.3 million compared with $532 million on Dec 31, 2019. The company had net long-term debt of $3,561.4 million as of Jun 30, 2020, down from $3,612.3 million on Dec 31, 2019.
Amid COVID-19-led uncertainty, American Axle has refrained from providing any guidance for full-year 2020.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -36.19% due to these changes.
At this time, American Axle has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, American Axle has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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