U.S. light-vehicle sales fell 6.1% year over year to 1.54 million units in May 2016. This marked the biggest decline in U.S. sales since Aug 2010.
While two less selling days compared with May 2015 played a role, the main culprit was a 16% fall in passenger car sales, which offset a 2.4% rise in truck sales. Sales on a seasonally adjusted annualized rate (“SAAR”) basis dropped to 17.46 million units in May 2016 from 17.47 million units in May 2015.
Although the fundamental factors influencing the auto industry remain strong, the rise in sales volume is expected to be low this year. Given the all-time high sales in 2015, even a small increase will set a new record. However, many analysts are of the opinion that auto sales are reaching a peak, which poses a concern.
In fact, automakers have been offering more and more incentives to lure in customers. Per TrueCar, average incentives per vehicle increased 7.1% in May. However, this too failed to pull up sales.
Should You Sell Auto Stocks Now?
While weak sales volume in a month may not be a reason to get rid of all auto stocks, the ones that have already been losing value should certainly be avoided.
Here, we take a look at four sell-rated auto stocks whose prices have plunged this year. Recently, these stocks have also been witnessing a downtrend in earnings estimates, which may be reflected in future share prices.
Japan-based Honda Motor Co., Ltd. HMC is a leading manufacturer of automobiles and the largest producer of motorcycles in the world.The company currently has a Zacks Rank #5 (Strong Sell) as well as a Zacks Style Score of “D” in Growth and “F” in Momentum.
Honda provided negative returns of 13.25% year to date (YTD) and 19.05% over the last one-year period. The company’s current-quarter earnings estimates have declined 12.99% over the last 7 days. Earnings estimates for the current year have also moved down 4.35% over the last 7 days and 11.41% over the last 30 days.
Japan-based Toyota Motor Corporation TM is the world’s leading automaker in terms of sales volume. Its product portfolio ranges from passenger cars and minivans to trucks as well as related parts and accessories.
Toyota currently carries a Zacks Rank #5. The company provided negative returns of 16% YTD and 25.05% over the last one-year period. Moreover, current-year earnings estimates for Toyota have dropped 5.74% over the last week and 16.17% over the last month.
Fuji Heavy Industries Ltd. FUJHY is a Japan-based manufacturer of automobiles and related products. It has a Zacks Rank #4 (Sell) and a Zacks Style Score of “F” in Momentum.
The company provided negative returns of 10.59% YTD and 1.69% over the last one-year period. Its current-quarter earnings estimates have declined 15.22% over the last 7 days. Moreover, current-year earnings estimates have fallen 3.38% over the last week and 10.91% over the last month.
China Automotive Systems Inc. CAAS is a Chinese holding company whose subsidiaries manufacture power steering systems and other component parts for automobiles. The company carries a Zacks Rank #5 as well as a Zacks Style Score of “D” in Growth and “F” in Momentum.
China Automotive provided negative returns of 11.29% YTD and 47.3% over the last one-year period. The company’s current-year earnings estimates have dropped 6.98% over the last month.
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
Be the first to comment