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Auto Stock Roundup: US Sales Down; Ford, Harley-Davidson Miss on Earnings

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The auto sector entered the fourth-quarter reporting cycle with Ford Motor Co. (F - Free Report) and Harley-Davidson, Inc. (HOG - Free Report) missing the earnings estimates and Lear Corp. (LEA - Free Report) delivering a positive surprise. Ford surpassed the quarter’s revenue estimates, while the other two missed. Even the January auto sales figures for the U.S. came in weak.

General Motors Company (GM - Free Report) and Honda Motor Co. (HMC - Free Report) announced a joint venture to produce an advanced hydrogen fuel cell system.

Recap of the Week’s Most Important Stories

1. U.S. light-vehicle sales fell 1.9% year over year to 1.14 million units in Jan 2017. Sales on a seasonally adjusted annualized rate (SAAR) basis fell to 17.57 million units in Jan 2017 from 18.38 million units in Dec 2016 and 17.62 million units in Jan 2016.

2. Ford posted adjusted earnings per share of 30 cents in the fourth quarter of 2016, which were 28 cents lower than that in fourth-quarter 2015 (excluding special items). Earnings also missed the Zacks Consensus Estimate of 32 cents per share. Ford logged revenues of $38.7 billion that surpassed the Zacks Consensus Estimate of $35.55 billion. Revenues were $1.6 billion lower than the year-ago quarter.

Ford’s adjusted earnings per share of $1.76 in 2016 were 17 cents lower than 2015 (excluding special items). Earnings also missed the Zacks Consensus Estimate of $1.80 per share. Revenues in the 2016 fell $2.2 billion to $151.8 billion.

Ford expects 2017 pre-tax profit to be lower than 2016 due to higher investments in electrification, autonomy and mobility (read more: Ford's Earnings Miss Estimates in Q4, Decrease Y/Y).

Ford currently carries a Zacks Rank #3 (Hold).

3. Harley-Davidson reported earnings of 27 cents per share in the fourth quarter of 2016, which missed the Zacks Consensus Estimate of 32 cents. However, earnings were higher than 22 cents recorded in the year-ago quarter. Operating revenues (excluding financial services) declined to $933 million in the fourth quarter of 2016 from $1.01 billion recorded in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $986 million.

Harley-Davidson reported earnings of $3.83 per share in 2016, up from $3.69 earned in 2015. However, earnings per share missed the Zacks Consensus Estimate of $3.88. Operating revenues (excluding financial services) decreased to $5.27 billion from $5.31 billion in 2015, also missing the Zacks Consensus Estimate of $5.38 billion.

Harley-Davidson expects motorcycle shipments in 2017 to be either the same or slightly lower than 2016. The company also projects operating margin and gross margin to be similar to the 2016 levels (read more: Harley-Davidson Misses on Q4 Earnings, View Weak).

Currently, Harley-Davidson carries a Zacks Rank #4 (Sell).

4. Lear Corp. posted adjusted earnings per share of $3.80 in the fourth quarter of 2016, up 19% from the year-ago quarter. Moreover, earnings beat the Zacks Consensus Estimate of $3.40. Revenues fell 2% year over year to $4.6 billion, missing the Zacks Consensus Estimate of $4.7 billion.

For 2016, Lear Corp. posted adjusted earnings per share of $14.03, up 29% the year-ago quarter. Moreover, earnings beat the Zacks Consensus Estimate of $13.66. Revenues gained 2% year over year to a record $18.56 billion, missing the Zacks Consensus Estimate of $18.66 billion.

In 2017, sales are expected to be around $19.5 billion, while core operating earnings are expected to be about $1.6 billion. 

Currently, Lear Corp. carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

5. General Motors and Honda announced plans to create a joint venture, Fuel Cell System Manufacturing, LLC, for the mass production of an advanced hydrogen fuel cell system. Both companies will use the system in their future vehicles. The joint venture will operate from General Motors’ existing battery pack manufacturing facility in Michigan. It is expected to require a total investment of $85 million.

Performance

All auto stocks recorded losses over the last week. Harley-Davidson posted the maximum loss among the stocks listed below.

Over the last six months, General Motors gained the most, while AutoZone was the worst performer.

Company

Last 1-Week Period

Last 6 Months

GM

-5.6%

+20.8%

F

-3.7%

+3.2%

TSLA

-2.1%

+9.7%

TM

-3.2%

+4.8%

HMC

-2.7%

+6.8%

HOG

-5.7%

+10.0%

AAP

-4.1%

-3.6%

AZO

-2.7%

-10.9%

Auto-Tires-Trucks Sector 5YR % Return

 

Auto-Tires-Trucks Sector 5YR % Return

What’s Next in the Auto Space?

Many companies, including Honda, General Motors, Toyota Motor Corp. (TM - Free Report) and Penske Automotive Group, Inc. (PAG - Free Report) will post results for the quarter ended Dec 31, 2016 in the coming week.

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