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American Axle (AXL) Beats on Q1 Earnings; Shares Rise

American Axle & Manufacturing Holdings Inc.’s AXL shares jumped 8.1% to close at $16.19 on May 6, after the company reported better-than-expected earnings for the first quarter of 2016. American Axle posted earnings of 78 cents per share for the first quarter that comfortably beat the Zacks Consensus Estimate of 71 cents. Moreover, earnings increased from 68 cents per share recorded in the first quarter of 2015.
 

The company reported net income of $61.1 million in the first quarter of 2016 compared with $53.2 million in the year-ago quarter. American Axle is focused on the launch of programs and advancing its product technology. This will be profitable for the company in the long run and help enhance shareholder value.

Revenues improved marginally to $969.2 million in the reported quarter from $969.1 million a year ago. However, the top line fell short of the Zacks Consensus Estimate of $1 billion.

American Axle’s content-per-vehicle – dollar value of product sales supporting customers’ North American light truck and sport utility vehicle (“SUV”) programs – dropped to $1,611 from $1,676 in first-quarter 2015. The company’s non-General Motors Company GM sales declined to $323.2 million from $328.9 million in the year-ago quarter.

Gross profit increased to $174 million (18% of sales) in first-quarter 2016 from $152.8 million (15.8% of sales) in the prior-year quarter. Meanwhile, operating income improved to $98.4 million from $84.3 million a year ago.

Share Repurchase

The board of directors of American Axle authorized share repurchases of $100 million through Dec 31, 2018. This repurchase authorization indicates management’s confidence in its long-term growth strategies. In addition, this will enhance shareholder value.

Financial Position

American Axle had cash and cash equivalents of $262 million as of Mar 31, 2016, down from $282.5 million as of Dec 31, 2015. Long-term debt was $1.39 billion as of Mar 31, 2016, compared to $1.38 billion at the end of 2015.

Cash flow from operations in the first quarter of 2016 was $26.2 million, compared with $6.4 million in first-quarter 2015. Net capital spending of the company was $50 million, compared with $43.5 million in the first quarter of 2015. Therefore, American Axle’s free cash outflow was $23.8 million in the first quarter of 2016 compared with $37.1 million in the first quarter of 2015.

Zacks Rank

Currently, American Axle carries a Zacks Rank #2 (Buy).

Some other favorably ranked automobile stocks are Lear Corp. LEA and Superior Industries International, Inc. SUP, both sporting a Zacks Rank #1 (Strong Buy).

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AMER AXLE & MFG (AXL): Free Stock Analysis Report
 
SUPERIOR INDS (SUP): Free Stock Analysis Report
 
LEAR CORPORATN (LEA): Free Stock Analysis Report
 
GENERAL MOTORS (GM): Free Stock Analysis Report
 
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