Last week, the European Automobile Manufacturers Association released data on new car registrations for May 2024. Registrations in the European Union (“EU”) car market came in at 911,697 units last month, witnessing a year-over-year decline of 3%. Registrations in key markets like Germany, France and Italy rose 4.3%, 2.9% and 6.6%, respectively, while Spain saw modest growth of 3.4%.

In the first five months of 2024, EU market vehicle registrations reached 4.6 million units, up 4.6% year over year. During the said timeframe, registrations in Germany, Spain, France and Italy recorded growth of 5.2%, 6.8%, 4.9% and 3.4%, respectively.

On the news front, recreational vehicle maker Winnebago Industries (WGO Quick QuoteWGO - Free Report) and used car auto retailer CarMax Inc. (KMX Quick QuoteKMX - Free Report) released their quarterly reports. Auto parts retailer AutoZone (AZO Quick QuoteAZO - Free Report) approved additional stock repurchase. Electric vehicle maker Polestar Automotive (PSNY Quick QuotePSNY - Free Report) announced the expansion of its commercial footprint and retail operations. Italian-American auto biggie Stellantis N.V. (STLA Quick QuoteSTLA - Free Report) also made it to the top stories with the recall of 1.2 million vehicles.

Last Week’s Top Stories

Winnebago reported adjusted earnings of $1.13 per share for third-quarter fiscal 2024 (ended May 25, 2024), missing the Zacks Consensus Estimate of $1.30 and falling 46.9% year over year. It reported revenues of $786 million for the quarter under review, missing the Zacks Consensus Estimate of $800 million. The top line also fell 12.7% year over year. Revenues in the Towable RV segment rose 0.6% year over year to $386.3 million. Revenues in the Motorhome RV segment slid 20.1% year over year to $299 million. Revenues in the segment were $87.9 million, decreasing 31.8% year over year.

Winnebago had cash and cash equivalents of $318.1 million as of May 25, 2024. Long-term debt (excluding current maturities) increased to $636.4 million from $592.4 million recorded as of Aug 26, 2023. The company approved a dividend of 31 cents per share payable on Jun 26, 2024, to shareholders of record as of Jun 12, 2024.

CarMax reported first-quarter fiscal 2025 (ended May 31, 2024) adjusted earnings per share of 97 cents, which missed the Zacks Consensus Estimate of 99 cents. The bottom line also declined from $1.16 per share recorded in the year-ago period. The company registered revenues of $7.11 billion in the quarter under review, which fell short of the Zacks Consensus Estimate of $7.19 billion. The top line also contracted 7.5% year over year.

Selling, general and administrative expenses increased 14% from the prior-year quarter to $638.6 million. The firm had cash/cash equivalents and long-term debt of $218.9 million and $1.59 billion, respectively, as of May 31, 2024. During the fiscal first quarter, CarMax repurchased shares worth $104 million. As of May 31, 2024, it had $2.26 billion remaining under the share repurchase authorization. KMX operated 245 used car stores as of May 31, 2024.

Stellantis is recalling around 1.2 million vehicles in the United States and Canada due to a software issue that can disable rearview cameras, increasing the risk of accidents. Per the National Highway Traffic Safety Administration, the issue stems from the radio software potentially preventing the display of rearview images. Owners of the affected vehicles will see a prompt on their media screens to accept the update. Stellantis has already updated the software in more than 735,000 vehicles.

The recall involves an over-the-air software update for various models that include 2021-2023 Chrysler Pacifica, 2021-2022 Dodge Durango, 2022 Ram 1500, 2500, 3500 and 2022-2023 Jeep Compass, Grand Cherokee, Wagoneer, Grand Wagoneer, Jeep Grand Cherokee and Ram Promaster vehicles.

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

AutoZone announced an additional stock repurchase authorization of $1.5 billion. Since the inception of the stock buyback program and including the latest authorization, the company has authorized $39.2 billion in share repurchases. In the last reported quarter, AutoZone repurchased shares worth $735 million. At the end of the quarter, it had over $1.4 billion remaining under share repurchase authorization.

Investment-grade ratings from major rating agencies and strong cash flow generation are allowing AZO to remain committed to returning value to shareholders. The company's annualized cash flow growth rate has been 11.8% over the past 3-5 years versus the industry average of 2.7%. Investors should note that AutoZone has a 5-year average return on capital of 71%, which is spectacular both in absolute and relative terms, depicting its financial efficiency.

Polestar is broadening its commercial and retail operations across existing and new markets as its vehicle lineup continues to expand. Polestar is rapidly expanding its geographic reach, planning to enter seven new markets across Asia, Europe and Latin America in 2025. France, the European Union’s second-largest electric car market after Germany, offers a significant opportunity. Additionally, PSNY aims in the Czech Republic, Slovakia, Hungary, Poland, Thailand and Brazil through local distribution partnerships.

In May, Polestar received a deficiency notice from Nasdaq for not filing its 2023 Annual Report on Form 20-F, violating the Nasdaq Listing Rule on timely filings with the SEC. The company now intends to submit its 2023 Annual Report on Form 20-F and release its preliminary unaudited financial and operational results for the first quarter of 2024 by the end of June.

Price Performance

The following table shows the price movement of some of the major auto players over the last week and six-month period.

Image Source: Zacks Investment Research

What’s Next in the Auto Space?

Industry watchers will await second-quarter U.S. vehicle delivery numbers by various auto giants.