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Auto Stock Roundup: GPI, PAG & LAD Beat on Earnings, Ford to Rev Up SUV Production
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The earnings for the quarter ending on Dec 31, 2017, are still going on. Some auto companies have reported their quarterly results last week including Group 1 Automotive Inc. (GPI - Free Report) , Penske Automotive Group, Inc. (PAG - Free Report) and Lithia Motors Inc. (LAD - Free Report) . Both the quarterly earnings and revenues for these companies surpassed the Zacks Consensus Estimates. On the basis of the year-over-year performance, both earnings and revenues came in higher.
Earnings apart, Ford Motor Company (F - Free Report) announced plans to rev up the production of two large sport utility vehicles (SUVs) by 25% in 2018, per Reuters. By expanding production at its Kentucky factory, Ford is planning to drive profit margins and take on rivals such as General Motors Company (GM - Free Report) and Tesla (TSLA - Free Report) from the field of electric and autonomous vehicles.
1. Group 1 Automotive reported adjusted earnings per share of $2.11 in fourth-quarter 2017, beating the Zacks Consensus Estimate of $1.87. The bottom line substantially improved from the prior-year quarter’s figure of $1.74. Results were aided by solid cost-control measures.
The company recorded an adjusted net income of $44.3 million, compared with $37.3 million in the year ago. Revenues increased 9.2% year over year to $2.92 billion, surpassing the Zacks Consensus Estimate of $2.82 billion.
In 2017, adjusted earnings came in at $7.73, up 4.2% from that of 2016. Also, total revenues increased to $11.1 billion up 2.2 % from the prior-year figure.
Revenues from new vehicle retail sales increased 10.2% to $1.71 billion, owing to a 6.4% rise in unit sales. The same from retailed used-vehicles grew 8.9% to $709.1 million on a 5.4% increase in unit sales. However, the metric from used vehicle wholesale sales declined 8% to $91.8 million.
At the Parts and Service business, the top line improved 10.5% to $343.5 million. Also, the company’s Finance and Insurance business witnessed a 10 % gain in revenues to $114.7 million.
2. Penske Automotive recorded adjusted earnings of $1.01 per share in fourth-quarter fiscal 2017, compared with 91 cents a year ago. The bottom line also surpassed the Zacks Consensus Estimate of $1. Including tax benefits, the earnings came in at $3.85.
Net income from continuing operations skyrocketed 300% to $330 million in the reported quarter from $82.6 million a year ago. Excluding tax benefits, the adjusted income from continuing operations was $86.6 million in comparison to $77.4 billion in the prior-year quarter.
Revenues rose 10.4% year over year to $5.4 billion, beating the Zacks Consensus Estimate of $5.24 billion. In comparison to fourth-quarter fiscal 2016, same-store retail unit sales declined 2.7% to 106,522 units, while retail unit sales went up 7% to 119,935. The rise in revenues is driven by solid U.S. retail automotive operations and a robust commercial truck business.
Gross profit increased 11.1% to $808.3 million from $727.3 million in fourth-quarter fiscal 2016. Operating income grew 9.4% to $137 million from $125.2 million in the year-earlier quarter (read more: Penske Automotive Q4 Earnings Top Estimates, Up Y/Y).
Penske Automotive carries a Zacks Rank #2 (Buy).
3. Ford recently announced plans to boost production of two large sport utility vehicles by 25% in 2018, per Reuters. By revving production of the new Lincoln Navigator and Ford Expedition at its Kentucky factory, this second-largest automaker in the United States will be able to drive profit margins and take on rivals such as General Motors Company and Tesla from the field of electric and autonomous vehicles.
In fourth-quarter 2017, Ford’s automotive profit margin declined to 3.7% from 5.7% in the year-ago quarter. Also, the company’s margins came in lower than that of its opponents such as General Motors and Fiat Chrysler Automobiles N.V. In fact, the profitable U.S. large SUV segment is dominated by General Motors with its models such as Chevrolet Suburban and GMC Yukon. In January 2018, General Motors sold over 19,000 large SUVs, whereas Ford managed to sell little less than 3,500 Expeditions and 1,300 Navigators.
Furthermore, increasing number of Americans are opting for of high-margin SUVs and pickup trucks over the passenger cars. Consequently, in the United States, passenger-car sales declined to 36.8% of total light vehicle sales in 2017. Notably, the urge to raise profit, amid huge competition and changing vehicles preference pattern of its consumers, might have prompted Ford to make such a move (read more: Ford to Gear Up Large Vehicle Production to Stay in the Race).
Ford carries a Zacks Rank #3 (Hold).
4. Daimler AG has rung the warning bell that its shifting focus to electric vehicles (EVs) could compel it to support its supply chain, per a Reuters report. In fact, many automakers, including Daimler, have scaled up production of EVs and are also updating the engine management software to keep a lid on pollution level.
In fact, due to a shift in customer demand, from diesel to gasoline engines and planned electrification of new model series, there will be a huge change in the supply components, particularly for the Mercedes-Benz Cars segment.
The new demand pattern may lead to underutilization of production capacities for some supplies, whereas overutilization of production capacities for some other. In the changed scenario, some suppliers may have to opt for expansion of production capacities at its plants. If the supplier is not able to cover fixed-costs, there is a high chance that the suppliers could ask for a compensation payment.
Daimler projects that its profit in 2018 would be affected as the company is investing a lot in electric and autonomous vehicles. Moreover, the political doldrums could result in supply bottlenecks for some raw materials. However, due to the intense competition, the ability of the company to pass on the higher expenses of commodities and other materials to the price of end vehicle is limited (read more: Daimler AG Signals Supply Chain Risks with Shift to EVs).
Daimler carries a Zacks Rank #2.
5. Lithia Motors reported adjusted earnings per share of $2.15 in the fourth-quarter of 2017, increasing from $1.86 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $2.1.
Reportedly, adjusted net income rose 15% to $54 million from $47 million in the year-ago quarter.
Revenues in the reported quarter were $2.7 billion, up from $2.3 billion in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $2.68 billion.
Revenues from new vehicle retail rallied 21% to $1.62 billion in the quarter. New vehicle retail sales volume expanded 17.3% to 45,202 units.
Used vehicle retail revenues increased 12.4% to $629.3 million in the quarter, whereas revenues from used vehicle wholesale increased 2.3% to $71.1 million. Used vehicle retail sales volume improved 12.3% to 32,242 units.
Revenues from service body and parts went up 18.9% to $271.5 million. The company’s finance and insurance business recorded a 22.1% rise in revenues to $103.2 million. Revenues from fleet and others surged 32.7% to $15.19 million.
Gross profit climbed 18.3% to $396 million in the reported quarter, from $334.8 million in the year-ago quarter.
Lithia Motors sports a Zacks Rank #1.
Performance
Last week, all these stocks reported a decline in share price. The steepest decline was witnessed by Tesla.
In the last six months, the maximum rise was witnessed by AutoZone, while Tesla shares declined the most.
Company
Last Week
Last 6 Months
GM
-1.4%
17.7%
F
-0.2%
-0.9%
TSLA
-6.6%
-11%
TM
-1%
19.6%
HMC
-1.7%
26.8%
HOG
-0.4%
0.5%
AAP
-0.8%
25.2%
AZO
-1%
39.6%
What’s Next in the Auto Space?
Watch out for the earnings releases and other developments in the sector in the coming days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Auto Stock Roundup: GPI, PAG & LAD Beat on Earnings, Ford to Rev Up SUV Production
The earnings for the quarter ending on Dec 31, 2017, are still going on. Some auto companies have reported their quarterly results last week including Group 1 Automotive Inc. (GPI - Free Report) , Penske Automotive Group, Inc. (PAG - Free Report) and Lithia Motors Inc. (LAD - Free Report) . Both the quarterly earnings and revenues for these companies surpassed the Zacks Consensus Estimates. On the basis of the year-over-year performance, both earnings and revenues came in higher.
Earnings apart, Ford Motor Company (F - Free Report) announced plans to rev up the production of two large sport utility vehicles (SUVs) by 25% in 2018, per Reuters. By expanding production at its Kentucky factory, Ford is planning to drive profit margins and take on rivals such as General Motors Company (GM - Free Report) and Tesla (TSLA - Free Report) from the field of electric and autonomous vehicles.
(Read the previous roundup here: Auto Stock Roundup for Feb 8, 2018)
Recap of the Week’s Most Important Stories
1. Group 1 Automotive reported adjusted earnings per share of $2.11 in fourth-quarter 2017, beating the Zacks Consensus Estimate of $1.87. The bottom line substantially improved from the prior-year quarter’s figure of $1.74. Results were aided by solid cost-control measures.
The company recorded an adjusted net income of $44.3 million, compared with $37.3 million in the year ago. Revenues increased 9.2% year over year to $2.92 billion, surpassing the Zacks Consensus Estimate of $2.82 billion.
In 2017, adjusted earnings came in at $7.73, up 4.2% from that of 2016. Also, total revenues increased to $11.1 billion up 2.2 % from the prior-year figure.
Revenues from new vehicle retail sales increased 10.2% to $1.71 billion, owing to a 6.4% rise in unit sales. The same from retailed used-vehicles grew 8.9% to $709.1 million on a 5.4% increase in unit sales. However, the metric from used vehicle wholesale sales declined 8% to $91.8 million.
At the Parts and Service business, the top line improved 10.5% to $343.5 million. Also, the company’s Finance and Insurance business witnessed a 10 % gain in revenues to $114.7 million.
Gross profit was up 9.2% year over year to $425.7 million. Operating income rose 18.3% to $91 million as well (read more: Group 1 Automotive Beats on Q4 Earnings & Revenues).
Group 1 Automotive sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
2. Penske Automotive recorded adjusted earnings of $1.01 per share in fourth-quarter fiscal 2017, compared with 91 cents a year ago. The bottom line also surpassed the Zacks Consensus Estimate of $1. Including tax benefits, the earnings came in at $3.85.
Net income from continuing operations skyrocketed 300% to $330 million in the reported quarter from $82.6 million a year ago. Excluding tax benefits, the adjusted income from continuing operations was $86.6 million in comparison to $77.4 billion in the prior-year quarter.
Revenues rose 10.4% year over year to $5.4 billion, beating the Zacks Consensus Estimate of $5.24 billion. In comparison to fourth-quarter fiscal 2016, same-store retail unit sales declined 2.7% to 106,522 units, while retail unit sales went up 7% to 119,935. The rise in revenues is driven by solid U.S. retail automotive operations and a robust commercial truck business.
Gross profit increased 11.1% to $808.3 million from $727.3 million in fourth-quarter fiscal 2016. Operating income grew 9.4% to $137 million from $125.2 million in the year-earlier quarter (read more: Penske Automotive Q4 Earnings Top Estimates, Up Y/Y).
Penske Automotive carries a Zacks Rank #2 (Buy).
3. Ford recently announced plans to boost production of two large sport utility vehicles by 25% in 2018, per Reuters. By revving production of the new Lincoln Navigator and Ford Expedition at its Kentucky factory, this second-largest automaker in the United States will be able to drive profit margins and take on rivals such as General Motors Company and Tesla from the field of electric and autonomous vehicles.
In fourth-quarter 2017, Ford’s automotive profit margin declined to 3.7% from 5.7% in the year-ago quarter. Also, the company’s margins came in lower than that of its opponents such as General Motors and Fiat Chrysler Automobiles N.V. In fact, the profitable U.S. large SUV segment is dominated by General Motors with its models such as Chevrolet Suburban and GMC Yukon. In January 2018, General Motors sold over 19,000 large SUVs, whereas Ford managed to sell little less than 3,500 Expeditions and 1,300 Navigators.
Furthermore, increasing number of Americans are opting for of high-margin SUVs and pickup trucks over the passenger cars. Consequently, in the United States, passenger-car sales declined to 36.8% of total light vehicle sales in 2017. Notably, the urge to raise profit, amid huge competition and changing vehicles preference pattern of its consumers, might have prompted Ford to make such a move (read more: Ford to Gear Up Large Vehicle Production to Stay in the Race).
Ford carries a Zacks Rank #3 (Hold).
4. Daimler AG has rung the warning bell that its shifting focus to electric vehicles (EVs) could compel it to support its supply chain, per a Reuters report. In fact, many automakers, including Daimler, have scaled up production of EVs and are also updating the engine management software to keep a lid on pollution level.
In fact, due to a shift in customer demand, from diesel to gasoline engines and planned electrification of new model series, there will be a huge change in the supply components, particularly for the Mercedes-Benz Cars segment.
The new demand pattern may lead to underutilization of production capacities for some supplies, whereas overutilization of production capacities for some other. In the changed scenario, some suppliers may have to opt for expansion of production capacities at its plants. If the supplier is not able to cover fixed-costs, there is a high chance that the suppliers could ask for a compensation payment.
Daimler projects that its profit in 2018 would be affected as the company is investing a lot in electric and autonomous vehicles. Moreover, the political doldrums could result in supply bottlenecks for some raw materials. However, due to the intense competition, the ability of the company to pass on the higher expenses of commodities and other materials to the price of end vehicle is limited (read more: Daimler AG Signals Supply Chain Risks with Shift to EVs).
Daimler carries a Zacks Rank #2.
5. Lithia Motors reported adjusted earnings per share of $2.15 in the fourth-quarter of 2017, increasing from $1.86 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $2.1.
Reportedly, adjusted net income rose 15% to $54 million from $47 million in the year-ago quarter.
Revenues in the reported quarter were $2.7 billion, up from $2.3 billion in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $2.68 billion.
Revenues from new vehicle retail rallied 21% to $1.62 billion in the quarter. New vehicle retail sales volume expanded 17.3% to 45,202 units.
Used vehicle retail revenues increased 12.4% to $629.3 million in the quarter, whereas revenues from used vehicle wholesale increased 2.3% to $71.1 million. Used vehicle retail sales volume improved 12.3% to 32,242 units.
Revenues from service body and parts went up 18.9% to $271.5 million. The company’s finance and insurance business recorded a 22.1% rise in revenues to $103.2 million. Revenues from fleet and others surged 32.7% to $15.19 million.
Gross profit climbed 18.3% to $396 million in the reported quarter, from $334.8 million in the year-ago quarter.
Lithia Motors sports a Zacks Rank #1.
Performance
Last week, all these stocks reported a decline in share price. The steepest decline was witnessed by Tesla.
In the last six months, the maximum rise was witnessed by AutoZone, while Tesla shares declined the most.
What’s Next in the Auto Space?
Watch out for the earnings releases and other developments in the sector in the coming days.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>