Yahoo Finance Auto Stock Roundup: General Motors, Ford Provide 2018 Outlook, Toyota Gears up for JV
The week saw a number of auto makers coming up with their 2018 outlook. General Motors Company (GM) expects 2017 earnings per share at the upper end of its guided range of $6-$6.5. Further for 2018, it expects the metric almost in line with the tally of 2017. The company expects that its performance in 2018 will be driven by its strengthening presence in the North American and Chinese markets as well as an improvement in the South American market.
Ford Motor Company F released preliminary results for 2017 and guidance for 2018. The company announced earnings per share of $1.95 for 2017, a rise of 80 cents from 2016. Also, the company announced 2017 adjusted earnings per share of $1.78, reflecting an increase of 2 cents from 2016. For 2018, the company expects adjusted EPS in the range of $1.45–$1.70. Rise in commodity prices and adverse effect of exchange rate can be attributed to this unfavorable outlook.
(Read the previous roundup here: Auto Stock Roundup for Jan 11, 2018)
Recap of the Week’s Most Important Stories
1. Toyota Motor Corporation TM and Mazda Motor Corporation announced that they have selected Huntsville, AL as their joint venture (JV) manufacturing site. Total investment of $1.6 billion will be made with equal funding contribution from both the companies.
This recent move will boost the manufacturing capacity of both Toyota and Mazda in the United States. Set to start production in 2021, the new hub will add up to 4,000 jobs.
Prior to this, in August, both Toyota and Mazda had announced plans of setting up an auto manufacturing plant in the country with an annual production capacity of 300,000 vehicles.
Focusing on the North American market, Toyota will be independently manufacturing Corolla model at the new plant, while Mazda will be producing cross-over models for the same target market (read more: Toyota, Mazda Choose Alabama as JV Auto Manufacturing Site).
Currently Toyota has a Zacks Rank #3 (Hold).
2. Per Reuters, Fiat Chrysler Automobiles N.V. FCAU reported that it will shift the manufacturing activity of its Ram heavy-duty pickup trucks to Michigan from its existing production facility in Mexico by 2020. Additionally, it will invest $1 billion in its future plant at Warren, MI, located near Detroit, which in turn, is likely to generate 2,500 jobs at the hub.
Notably, a year ago, Fiat Chrysler had announced this probable shifting of its heavy-duty pickup production to the United States, influenced by the U.S. tax and trade policies. Further, the U.S. government’s high chances of exit from the North American Free Trade Agreement (NAFTA) in the near future would compel automakers to pay a duty of 25% for pickup trucks manufactured in Mexico and sold across the United States.
Almost 90% of the company’s Ram heavy-duty pickups is built at Mexico’s Saltillo plant and sold in the United States or Canada. Moreover, in 2017, Fiat Chrysler had scaled up its vehicle production by 39% to 639,000 units. This makes the company the third largest manufacturer of vehicles in Mexico, followed by Nissan Motor Co. and General Motors Company, respectively (read more: Fiat Chrysler to Shift Plant, Invest $1B in US Hub).
Currently Fiat Chrysler has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
3. Per Reuters, Volkswagen AG’s VLKAY core auto division has achieved record-high sales in 2017, primarily on higher demand for the company’s major brand models in the American and Chinese market, which collectively offset the sales decline in the Western Europe market.
Worldwide sales volume of Volkswagen brand cars increased 4.2% to 6.23 million units, aided by its extended array of sport-utility vehicle (SUVs) models, including the company’s new Atlas and Teramont models.
Talking about the regional sales volume in 2017, China’s vehicle sales witnessed a rise of 5.9% to 3.18 million cars. While in the United States, Volkswagen sales expanded 5.2% to 339,700 units. However, the company witnessed a decline of 2.5% to 1.43 million cars in its western European market as an after-effect of its diesel emission scandal (read more: Volkswagen's Core Auto Sale Reaches Record High in 2017).
Currently Volkswagen has a Zacks Rank #2.
4. Ford came up with preliminary results for 2017 and guidance for 2018. The company announced earnings per share of $1.95 for 2017, a rise of 80 cents from 2016. Also, the company announced 2017 adjusted earnings per share of $1.78, up 2 cents from 2016. For 2018, the company expects adjusted EPS in the range of $1.45-$1.70. Rise in commodity prices and adverse effect of exchange rate can be attributed to this unfavorable outlook.
The company also expects earnings of Ford Credit for 2018 to decrease because of higher interest rates. Prices of a few metals such as aluminum and steel are adversely affecting the company.
Also, only a couple of days ago, Ford announced that it is set to raise its planned investment in electric vehicles (EVs) to $11 billion by 2022. Moreover, the auto giant has plans of launching 40 hybrid and fully EVs by that time. The latest proposed investment amount is considerably higher than the previously committed $4.5 billion by 2020 (read more: Ford Provides 2017 Preliminary Results & 2018 Outlook).
Currently Ford has a Zacks Rank #2.
5. General Motors announced that its forecast for 2018 results is mostly in line with its anticipated 2017 results. The 2018 performance will be driven by its strengthening presence in the North American and Chinese markets as well as an improvement in the South American market. Also, its enhanced growth of other businesses including GM Financial and its continuous cost efficiencies will contribute to its 2018 financials.
The company expects 2017 earnings per share at the upper end of its guided range of $6-$6.5. Further for 2018, it expects the metric to be almost in line with the tally of 2017.
Per management, the uptrend achieved in 2017 is likely to continue and further pick up the momentum to fortify in 2018 as well as in 2019. Also, reorganizing the company in the last few years has enabled it to invest in resources and funds for developing products with high returns. Few of these high-yielding products include next-generation trucks, slated to be introduced by the end of 2018 (read more: General Motors' 2018 Earnings In Line With 2017 Estimates).
Currently General Motors has a Zacks Rank #3.
Performance
Company | Last Week | Last 6 Months |
GM | 2.4% | 23.2% |
F | -6.5% | 6.3% |
TSLA | 3.7% | 5.8% |
TM | 3.2% | 27.9% |
HMC | 0.1% | 31.3% |
HOG | 0.7% | 8.9% |
AAP | 4.3% | 15.2% |
AZO | 2.6% | 58.9% |
Last week, all the stocks in the table moved upward, except Ford. The steepest rise was witnessed by Advance Auto Parts, Inc. AAP and the minimum increase was registered by Honda Motor Co., Ltd. HMC.
All these stocks also rose in the last six months. The sharpest rise was witnessed by AutoZone, Inc. and the minimum increase was registered by Tesla.
What’s Next in the Auto Space?
Watch out for the earnings releases and usual news releases of auto companies over the next week.
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Ford Motor Company (F) : Free Stock Analysis Report
Honda Motor Company, Ltd. (HMC) : Free Stock Analysis Report
Toyota Motor Corp Ltd Ord (TM) : Free Stock Analysis Report
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