On Dec 29, 2014, shares of American Axle & Manufacturing Holdings Inc. (AXL) reached a new 52-week high of $22.88, before eventually closing at $22.79. The closing price represents a year-to-date return of 12.8%.
Share Price Drivers
Like most companies in the automobile sector, American Axle’s share price is also getting a boost from the declining oil and gas prices. Moreover, the company posted encouraging third-quarter 2014 results. While the company’s earnings of 63 cents per share were in line with the Zacks Consensus Estimate, the figure demonstrated an improvement of 50% from adjusted earnings of 42 cents in the third quarter of 2013.
The year-over-year upside in profits was driven by improved sales, productivity and operational stability. Revenues went up 15.8% to $950.8 million from $820.8 million in the third quarter of 2013, marginally surpassing the Zacks Consensus Estimate of $949 million.
American Axle is expanding its manufacturing footprint in Asia, where growing demand for vehicles is enhancing production volumes. The company expects to expedite the expansion of its high-quality, cost-competitive and operationally flexible manufacturing facilities in Brazil, China, India, Mexico, Poland and Thailand.
American Axle’s efforts at diversifying its customer base are generating incremental revenues. Apart from General Motors Co. (GM) and Chrysler, the company supplies driveline systems and other components to PACCAR Inc. (PCAR), Ford Motor Co. (F) and various other original equipment manufacturers (OEMs). The company’s non-GM sales increased 36.5% year over year to $882.7 million in the first nine months of 2014.
Currently, American Axle carries a Zacks Rank #3 (Hold). The company is a leading supplier of driveline systems, modules and components for the light vehicle market.
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