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Auto Stock Roundup: US Sales Surge, Ford Posts Strong Earnings, Tesla Loss Widens

Strong U.S. light-vehicle sales last month led to a new April record. As a result, sales on a seasonally adjusted annualized rate (“SAAR”) basis also improved significantly. Meanwhile, Ford Motor Co. F and Tesla Motors, Inc. TSLA reported first-quarter results. While Ford posted strong earnings and revenues, Tesla’s loss was significantly wider than expected. However, Tesla announced that it will expedite production, which should pull up the stock in today’s trading session.

In another major development, the National Highway Traffic Safety Administration (NHTSA) ordered a massive expansion of the Takata airbag recall.

(Read the previous roundup here: Auto Stock Roundup for Apr 28, 2016)

Recap of the Week’s Most Important Stories

1. U.S. light-vehicle sales increased 3.5% year over year to 1.51 million units in Apr 2016. Record April sales pulled up SAAR to 17.42 million units from 16.56 million units in Mar 2016 and 16.77 million units in Apr 2015. General Motors Company GM led in terms of sales volume despite a 3.5% year-over-year decline.

2. Ford posted adjusted earnings per share of 68 cents in the first quarter of 2016, 39 cents higher than first-quarter 2015 (excluding special items). Moreover, earnings per share surpassed the Zacks Consensus Estimate of 43 cents. Revenues increased to $37.7 billion from $33.9 billion in the year-ago quarter. Moreover, the top line outpaced the Zacks Consensus Estimate of $36.10 billion. Ford expects 2016 pre-tax profit, earnings per share, automotive revenue and automotive operating margin to be equal to or higher than the 2015 levels. The company also anticipates recording strong automotive operating-related cash flow, albeit below 2015 levels (read more: Ford's Q1 Earnings Beat Estimates, View Reaffirmed).

3. Tesla incurred adjusted loss (excluding one-time items other than stock-based compensation expense) of $1.24 per share in the first quarter of 2016, much wider than adjusted loss of 70 cents in the year-ago quarter. Moreover, the loss was significantly wider than the Zacks Consensus Estimate of a loss of 78 cents per share. Adjusted revenues improved 45% year over year to $1.60 billion, in line with the Zacks Consensus Estimate.

The automaker is targeting 80,000–90,000 vehicle deliveries in 2016, including 17,000 in the second quarter. Tesla has also decided to ramp up its production to 500,000 units by 2018, rather than the previous plan of 2020. This will lead to significantly higher capital expenditure in 2016, but should prove beneficial in the long run.

4. The NHTSA has ordered automakers to recall another 35–40 million Takata airbag inflators in the U.S. by 2019. The defective Takata airbags can explode, shooting metal fragments and injuring passengers, in case of a car crash. Around 24 million vehicles with 28.8 million airbag inflators have already been recalled for the defect. The expanded recall includes three new automakers –– Tesla, Fisker Automotive and Jaguar Land Rover. This takes the total affected automakers to 17. The news coincides with reports of two more casualties linked to the Takata airbags in Malaysia. This takes the global casualty count due to this defect to 13.

5. Penske Automotive Group, Inc. PAG announced a 3.9% increase in its quarterly cash dividend to 27 cents per share. The increase was driven by strong operating performance in the first quarter of 2016. It also reflects the company’s commitment to return capital to its shareholders. The increased dividend for the first quarter will be paid on Jun 1 to shareholders of record as of May 16, 2016.

Performance

Most auto stocks recorded losses over the last week, led by Tesla. AutoZone, Inc. AZO was the only gainer among the stocks listed blow.

Meanwhile, Advance Auto Parts Inc. AAP retained its position as the biggest loser over the last six months.

Company

Last 1-Week Period

Last 6 Months

GM

-4.9%

-13.7%

F

-2.6%

-8.7%

TSLA

-11.5%

-4.0%

TM

-5.4%

-19.4%

HMC

-7.0%

-19.3%

HOG

-5.4%

-5.5%

AAP

-2.2%

-22.2%

AZO

+0.7%

-1.3%

What’s Next in the Auto Space?

Toyota Motor Corporation TM will report its financial results for the fourth quarter and fiscal year ended Mar 31, 2016 in the coming week.

A few automakers will also report their China and Europe auto sales for April.

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PENSKE AUTO GRP (PAG): Free Stock Analysis Report
 
FORD MOTOR CO (F): Free Stock Analysis Report
 
TESLA MOTORS (TSLA): Free Stock Analysis Report
 
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
 
ADVANCE AUTO PT (AAP): Free Stock Analysis Report
 
AUTOZONE INC (AZO): Free Stock Analysis Report
 
GENERAL MOTORS (GM): Free Stock Analysis Report
 
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