Most of the auto stocks moved up in the last one-week period on good October sales data and the impact of the positive movement in the overall market. Tesla Motors, Inc. (TSLA) was the only major stock in the sector to fall, as it recorded significant losses in the third quarter and delayed the delivery of Model X. Meanwhile, Toyota Motor Corp.’s (TM) strong earnings results and improved guidance pulled up the stock.
Stock price of Ford Motor Co. (F) and General Motors Co. (GM) remained nearly at the same level as a week ago as the positive momentum of the overall market offset the impact of the weak monthly sales data by the companies and five recalls by Ford.
(Read last to last week’s recap here: Auto Stock Roundup: GM, Ford Beat Earnings, Honda Misses.)
Recap of the Week’s Most Important Stories
1. High consumer confidence and declining fuel prices drove U.S. light-vehicle sales up 6% year over year to 1.28 million units in Oct 2014. Sales on a seasonally adjusted annualized rate (SAAR) basis amounted to 16.5 million units against 15.4 million in Oct 2013. Crossover vehicles and light trucks accounted for most of the improvement with car sales contributing as well.
Most major automakers impressed with their financial results. Chrysler recorded the maximum year-over-year improvement, while General Motors led in absolute figures, in spite of witnessing a marginal year-on-year improvement. Toyota, Nissan Motor Co. Ltd. (NSANY) and Honda Motor Co., Ltd. (HMC) also experienced sales growth. Ford suffered a slight decline as plant retooling hurt production volumes. (Read more: U.S. Auto Sales Up on Consumer Confidence, Low Fuel Prices.)
2. Tesla reported adjusted loss (excluding one-time items other than stock-based compensation expense) of 25 cents per share in the third quarter of 2014, deteriorating from adjusted loss of 4 cents in the year-ago quarter. The loss was significantly wider than the Zacks Consensus Estimate of a loss of 15 cents. Top line jumped 54.7% to $932.3 million in the quarter from $602.6 million a year ago. Revenues also surpassed the Zacks Consensus Estimate of $868 million.
Tesla also revealed that it will delay commencing the deliveries of Model X to the third quarter of 2015 in order to increase its validation testing time. The company believes that this will ensure the best possible product and will benefit the company in the long run, in spite of weighing on earnings in the short term.
3. Toyota recorded earnings of ¥170.54 per share ($3.28 per ADR) in second-quarter fiscal 2015 (ended Sep 30, 2014), beating ¥138.26 per share ($2.79 per ADR) in second-quarter fiscal 2014 (ended Sep 30, 2013). Earnings per ADR surpassed the Zacks Consensus Estimate of $3.14. Consolidated revenues in the quarter increased 4.3% year over year to ¥6.55 trillion ($63 billion). Revenues surpassed the Zacks Consensus Estimate of $59.33 billion.
Toyota also raised its guidance for consolidated revenues, operating income and net earnings for fiscal 2015. However, vehicle sales guidance for the fiscal year was lowered. (Read more: Toyota Q2 Earnings Beat Estimates on Higher Revenues.)
4. General Motors and its Chinese joint ventures recorded a 3.2% year-over-year increase in sales in the nation to 291,371 vehicles in Oct 2014. The improved performance was attributable to record high results by the automaker’s Shanghai GM and SAIC-GM-Wuling manufacturing joint ventures.
5. Ford announced five separate recalls covering more than 202,000 cars, vans and trucks in North America. The problems are varied and range from fire risk and engine stalling to improper repair in the previous recall. (Read more: Ford Announces 5 Recalls Covering 202K Vehicles.)
Performance
Most auto stocks generated gains in the last five trading sessions. Toyota recorded the maximum gains on the back of strong financial results, while Tesla declined the most due to wider-than-expected losses.
Meanwhile, Advance Auto Parts Inc. (AAP) gained the maximum in the last six months, while Harley-Davidson, Inc. (HOG) lost the most.
|
Company |
Last 1-Week Period |
Last 6 Months |
|
GM |
0.0% |
-11.6% |
|
F |
+0.2% |
-10.4% |
|
TSLA |
-3.0% |
+11.4% |
|
TM |
+4.8% |
+11.4% |
|
HMC |
+3.3% |
-5.9% |
|
HOG |
+0.5% |
-11.9% |
|
AAP |
+3.0% |
+24.0% |
|
AZO |
+1.7% |
+6.2% |
What’s Next in the Auto World?
Things are expected to somewhat slow down in the auto sector, as most companies have already reported third-quarter earnings. Advance Auto Parts, which is set to release earnings today, is among the few that are left to report earnings.
Additionally, following General Motors, other automakers are expected to report their monthly sales for China in the coming week. Europe sales figures for October should also come out in the coming weeks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment