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Auto Stock Roundup: BWA, HMC & Others Report Quarterly Loss Amid Coronavirus Woes

Zacks Equity Research
·4-min read

A host of auto companies reported quarterly numbers in the past week. Companies including Honda Motors, Lear Corporation and BorgWarner incurred quarterly loss for their latest reporting cycle. The pandemic-induced lower demand and sales weighed on the companies’ quarterly performance. Nonetheless, most of the companies have still managed to report better-than-expected results.

Early last week, various automakers reported U.S. car sales for July. However, since major auto bigwigs have unveiled just the quarterly sales numbers, it's difficult to get a clear picture of how the industry is recovering. Hyundai, Volvo and Mazda came out with higher year-over-year sales for July, whereas Japan-based auto giants Honda and Toyota reported weaker sales than July 2019.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

BorgWarner Inc. BWA reported adjusted loss of 14 cents per share for second-quarter 2020, significantly narrower than the Zacks Consensus Estimate of a loss of 47 cents. It had reported earnings of $1 per share in the year-ago quarter. Net sales slid 44% year over year to $1,426 million due to production disruptions arising from the coronavirus crisis. The reported figure, however, beat the Zacks Consensus Estimate of $1,175 million.For 2020, the company projects net sales of $8-$8.4 billion. Free cash flow is expected in the band of $300-$400 million this year. (BorgWarner Posts Narrower-Than-Expected Loss in Q2)

Honda Motor HMC reported a loss of 44 cents per ADR for first-quarter fiscal 2021, much narrower than the Zacks Consensus Estimate of a loss of 70 cents. The company had reported earnings of 89 cents per share in the year-ago quarter. Quarterly revenues plunged 45.7% year over year to $19,747 million, missing the Zacks Consensus Estimate of $20,114 million.For fiscal 2021, the firm expects sales and operating profit of ¥12.8 trillion and ¥200 billion, respectively. Further, it anticipates earnings per share of ¥95.56 per share for the fiscal year. (Honda Q1 Loss Narrower Than Expected, Sales Lag Estimates)

Carvana Co. CVNA reported second-quarter 2020 loss per share of 62 cents, narrower than the Zacks Consensus Estimate of a loss of 86 cents. The online used car dealer incurred a loss of 40 cents a share in second-quarter 2019.For the reported quarter, total revenues came in at $1,118 million, which missed the Zacks Consensus Estimate of $1,130 million. However, the top line increased from the year-ago number of $986 million. In the second quarter, the number of vehicles sold to retail customers grew 25% to 55,098 from the prior-year period’s 44,000.  (Carvana's Q2 Loss Widens Y/Y, Sales Miss Estimates)

Lear Corporation’s LEA second-quarter 2020 adjusted loss came in at $4.14 per share, narrower than the Zacks Consensus Estimate of a loss of $4.98. The company had recorded earnings of $3.78 per share in second-quarter 2019. In the reported quarter, revenues plummeted 51% year over year to $2,445 million. This downside resulted from lower production amid the coronavirus pandemic and foreign-exchange rate fluctuations. The top line, however, beat the Zacks Consensus Estimate of $2,136 million. (Lear Q2 Loss Narrower Than Expected, Sales Top, Down Y/Y)

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past week, shares of General Motors, Toyota and Ford have gained. General Motors has witnessed the maximum gain in the said period. In the past six months, shares of Tesla, Advance Auto Parts and AutoZone have increased. Tesla has gained the most in the said period.

What’s Next in the Auto Space?

Watch out for further impact of the pandemic on the auto sector. Investors are keenly awaiting China-based electric vehicle maker NIO Inc.’s NIO results, set to be released this week.

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