Auto Stocks: GM, Fiat Chrysler Tata Motors, AutoZone
Zacks Investment Research | May 29, 2015 01:47AM ET
Earnings releases grabbed headlines once again this week as Advance Auto Parts Inc. (NYSE:AAP), AutoZone (NYSE:AZO) and Tata Motors Ltd. (NYSE:TTM) released their quarterly results. Another major revelation was General Motors' (NYSE:GM) reported rejection of a merger proposal by Fiat Chrysler Automobiles (NYSE:FCAU). Meanwhile, Ford Motor (NYSE:F) has opened a new regional sales office and a purchasing office in Morocco to expand its North African operations.
(Read last to last week’s recap here: Auto Stock Roundup for May 21, 2015)
Recap of the Week’s Most Important Stories
1. General Motors has reportedly turned down a merger proposal by Fiat Chrysler. Going by media reports, Fiat Chrysler had planned this mega-merger in an attempt to cut costs. The proposed merger would have resulted in significant cost savings for the company and led to the creation of an automotive giant. Fiat Chrysler is under pressure as it has the highest debt levels in the auto industry and can barely break even in Europe (read more: General Motors Rejects Fiat Chrysler's Merger Proposal ).
2. Advance Auto Parts reported a 6.2% rise in adjusted comparable earnings to $2.39 per share in the first quarter of fiscal 2015 (ended Apr 25, 2015) from $2.25 in the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $2.50 per share. Revenues went up 2.3% year over year to $3.04 billion, missing the Zacks Consensus Estimate of $3.06 billion.
The rise in sales was driven by benefits from the addition of new stores and an increase in comparable store sales. Advance Auto Parts projects adjusted earnings per share in the range of $8.10–$8.30 for fiscal 2015, down from the previous forecast of $8.35–$8.55 (read more: Advance Auto Parts' Q1 Earnings Miss Estimates, Rise Y/Y ).
3. AutoZone reported a 13.1% rise in earnings per share to $9.57 for the third quarter of fiscal 2015 (ended May 9, 2015) from $8.46 recorded in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $9.50. Net income increased 8.4% to $309.1 million from $285.2 million a year ago. Quarterly revenues improved 6.5% year over year to $2.49 billion yet marginally missed the Zacks Consensus Estimate of $2.50 billion (read more: AutoZone Q3 Earnings Beat, Revenues Miss Marginally ).
4. Tata Motors’ earnings declined to INR5.32 per ordinary share (46 cents per American Depositary Share or ADS) for the fourth quarter of fiscal 2015 (ended Mar 31, 2015) from INR12.16 per share ($1.03 per ADS) in the year-ago quarter. Consolidated revenues increased 3.5% year over year to INR675.76 billion ($10.61 billion). This improvement was attributable to an increase in wholesale volumes and a better product mix.
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5. Ford has opened a new regional sales office in Casablanca and a purchasing office in Tangier. These new offices in Morocco are part of the company’s efforts to grow its North African operations. Ford plans to launch seven new vehicles and open 13 new retail facilities in North Africa in 2015. Also, the automaker intends to open eight new showrooms in Morocco by the end of this year. Further, it plans to increase the parts purchased from North Africa-based suppliers by over 100% (read more: Ford Opens New Sales and Purchasing Offices in Morocco ).
Performance
Most auto stocks recorded small price changes over the last week. Advance Auto Parts gained the maximum over the period. Meanwhile, Harley-Davidson Inc. (NYSE:HOG) lost the maximum in the last week and six months. AutoZone held on to its position as the biggest gainer over the last six months.
What’s Next in the Auto Space?
Automakers will report their U.S. auto sales for May on Jun 2. Sales in China and Europe will also be reported soon.
Ford will pay a quarterly cash dividend of 15 cents per share on Jun 1 to shareholders of record as on May 1, 2015.
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