On Jan 22, 2015, we issued an updated research report on American Axle & Manufacturing Holdings, Inc. (AXL). The company reported positive earnings surprises in two of the last four quarters with an average beat of 10.9%.
American Axle posted earnings of 63 cents in third-quarter 2014, 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.
Revenues went up 15.8% to $950.8 million from $820.8 million in the third quarter of 2013. Also, the figure marginally surpassed the Zacks Consensus Estimate of $949 million.
American Axle’s backlog of new and incremental business, launching from 2014 through 2016, is valued at $900 million in future annual sales. The new business should help the company maintain compounded annual growth rate of about 11–12%, double the expected industry growth rate, till 2015-end.
American Axle is undergoing significant expansion of its manufacturing footprint in Asia, where growing demand for vehicles is leading to increased production volumes. Further, the company’s efforts at diversifying its customer base, to boost non-General Motors Company (GM) sales, are generating incremental revenues.
However, despite these efforts, American Axle depends significantly on GM for its sales. About 68% of its consolidated net sales in the first nine months of 2014 were made to GM. Pricing pressure by original equipment manufacturers also remains a concern.
Some peers in the auto industry that are currently performing well include Meritor, Inc. (MTOR) and Magna International Inc. (MGA).
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
Be the first to comment