Honda Motor Co., Ltd. HMC,Toyota Motor Corporation TM and Tesla Motors, Inc. TSLA were the major companies in the auto sector to report earnings over the last week. All three reported better-than-expected earnings and revenues for the quarter ended Jun 30, 2015.
Meanwhile, automakers also reported strong U.S. sales data for July. In a separate development, General Motors Company GM announced two investments, one in India and the other in North America.
(Read last to last week’s recap here: Auto Stock Roundup for Jul 30, 2015)
Recap of the Week’s Most Important Stories
1. U.S. light-vehicle sales increased 5.3% year over year to 1.51 million units in July. Sales on a seasonally adjusted annualized rate (“SAAR”) basis surged to 17.55 million units in Jul 2015 from 17.16 million units in Jun 2015. This is the second-highest SAAR since Jul 2005. The impressive sales volume was driven by strong demand for light trucks.
2. Honda reported a 19.6% increase in earnings to ¥186.0 billion ($1.52 billion) or ¥103.22 (84 cents) per share in the first quarter (ended Jun 30, 2015) of fiscal 2016 from ¥155.6 billion ($1.53 billion) or ¥86.34 (85 cents) per share in the year-ago quarter. Further, earnings per share comfortably surpassed the Zacks Consensus Estimate of 65 cents.
Consolidated net sales and other operating revenues went up 15.5% year over year to ¥3.70 trillion ($30.26 billion). The figure also surpassed the Zacks Consensus Estimate of $27.35 billion. The year-over-year increase can be attributed to higher revenues from automobile and financial services business operations, as well as favorable foreign currency translation effects.
For fiscal 2016, Honda expects revenues to increase 8.8% year over year to ¥14.5 trillion ($126.1 billion). Operating income is likely to rise 2.1% to ¥685 billion ($5.96 billion). Net income is projected to improve 3.1% to ¥525 billion ($4.57 billion) or ¥291.30 ($2.53) per share (read more: Honda's Q1 Earnings Beat Estimates, Rise 19.6% Y/Y).
3. Toyota recorded earnings of ¥205.30 per share ($3.37 per ADR) in first-quarter fiscal 2016 (ended Jun 30, 2015) compared with ¥185.34 per share ($3.63 per ADR) earned in first-quarter fiscal 2015 (ended Jun 30, 2014). Earnings per ADR also surpassed the Zacks Consensus Estimate of $2.94.
Consolidated revenues increased 9.3% year over year to ¥6.99 trillion ($57.8 billion) in the reported quarter. Revenues also outpaced the Zacks Consensus Estimate of $54.4 billion.
Toyota raised its consolidated revenue guidance to ¥27.8 trillion ($237.6 billion) from ¥27.5 trillion ($235 billion) for fiscal 2016. The revenue guidance reflects a 2.1% improvement over fiscal 2015 (read more: Toyota Outshines Q1 Earnings and Revenue Estimates).
4. Tesla reported adjusted loss (excluding one-time items other than stock-based compensation expense) of 82 cents per share in the second quarter of 2015. The loss was wider than adjusted loss of 14 cents in the year-ago quarter. However, the loss was narrower than the Zacks Consensus Estimate of loss of $1.39. Adjusted revenues jumped 40% to $1.2 billion and surpassed the Zacks Consensus Estimate of $1.16 billion.
5. General Motors’ Chevrolet brand announced a $1 billion investment in India. This will strengthen Chevrolet’s Talegaon manufacturing base in Maharashtra and create around 12,000 jobs in India for General Motors and its suppliers. Additionally, General Motors will invest $877 million in building a new body shop for the Flint assembly plant. The investment will also be used to enhance the general assembly area inside the plant, and for the retooling and installation of new equipment.
Performance
Performance of auto stocks remained mixed over the last week. Honda led the list of gainers, driven by better-than-expected earnings. Meanwhile, Toyota lost the maximum over the week despite reporting strong financial results.
While Tesla was the top gainer in the six-month period, General Motors was the worst performer.
|
Company |
Last 1-Week Period |
Last 6 Months |
|
GM |
-1.1% |
-12.2% |
|
F |
-2.7% |
-6.7% |
|
TSLA |
+2.4% |
+24.3% |
|
TM |
-3.2% |
-2.6% |
|
HMC |
+11.4% |
+9.3% |
|
HOG |
-0.9% |
-9.5% |
|
AAP |
+1.3% |
+8.2% |
|
AZO |
+2.7% |
+16.4% |
What’s Next in the Auto Space?
In the coming week, a few automakers will release their China and Europe auto sales data for July.
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