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Auto Stock Roundup: TM Beats, HFC Misses, TSLA Issues Recall & More

Zacks Equity Research

Last week, Japanese auto biggies Toyota Motor and Honda Motor came out with third-quarter fiscal 2020 results. While Toyota surpassed earnings estimates, Honda missed the same. Both the companies updated their fiscal 2020 outlook. AutoNation, Goodyear Tire & Rubber, and Lithia Motors also unveiled fourth-quarter 2019 financial numbers this week. Meanwhile, EV pioneer Tesla is recalling most of the Model X SUVs that were manufactured before mid-October 2016.Tesla currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

Toyota TM posted third-quarter fiscal 2020earnings of $4.79 per ADR, up from the year-ago figure of $1.11. Moreover, the bottom line surpassed the Zacks Consensus Estimate of $3.84. Consolidated revenues decreased 3.3% year over year to ¥7.5 trillion ($69.4 billion). The top line also lagged the Zacks Consensus Estimate of $69.7 billion.For fiscal 2020, Toyota’s forecast of consolidated vehicle sales of 8.95 million units remains unchanged. The company expects consolidated net revenues, operating income and net income to be ¥29.5 trillion, ¥2.5 trillion and ¥2.35 trillion, respectively. (Read more: Toyota Earnings Beat, Revenues Miss Estimates in Q3)

Honda HMC reported fiscal third-quarter 2020earnings of 61 cents per ADR, lagging the Zacks Consensus Estimate of 69 cents and decreasing from the year-ago earnings of 85 cents. The firm reported revenues of $34,470 million, missing the Zacks Consensus Estimate of $34,606 million and declining from the prior-year sales of $35,250 million. The Japanese automaker expects revenues to be ¥15.15 trillion at the end of fiscal 2020, indicating a 4.6% year-over-year decline. Operating income is projected at ¥730 billion, suggesting 0.5% year-over-year growth. Operating margin is now anticipated to be 4.8%. Earnings per share at the end of fiscal 2020 are expected to be ¥339.64. (Read more: Honda Lags Q3 Earnings & Sales Estimates, Ups View)

Tesla TSLA is recalling most of the Model X SUVs, built by the company before mid-October 2016, over power steering issue. The company observed excessive corrosion on the aluminum bolts that connect the power steering gear in the affected Model X models. Notably, if the bolts break from corrosion, the driver may lose power steering assist. The company said that if the bolts fracture from corrosion, the driver could continue to steer, but it would require more force. Tesla will replace the bolts and apply a corrosion-preventative sealer in all affected Model X vehicles. Reportedly, this recall affects 14,193 and 843 vehicles in the United States and Canada, respectively.

Goodyear Tire GT reported adjusted earnings per share of 19 cents in fourth-quarter 2019 compared with 51 cents in the prior-year quarter. Further, its earnings missed the Zack Consensus Estimate of 45 cents. It delivered net revenues of $3,713 million, lower than $3,876 million reported in the year-ago quarter. Also, its revenues missed the Zacks Consensus Estimate of $3,804 million. Revenues in the Americas segment declined year over year to $2.03 billion from $2.11 billion. Revenues in the Europe, Middle East and Africa segment were $1.14 billion, down year over year from $1.21 billion. Revenues in the Asia Pacific segment decreased 1% to $546 million due to lower sales in other tire-related businesses and unfavorable foreign currency translation. (Read more: Goodyear Q4 Earnings & Revenues Miss Estimates, Down Y/Y)

Lithia Motors LAD reported adjusted earnings per share of $2.95 in fourth-quarter 2019, marking a 15% increase from the prior-year quarter’s $2.57. Total revenues grew 9.9% year over year to $3,269 million. The figure also outpaced the Zacks Consensus Estimate of $3,256 million. Total same-store sales grew 7% year over year .Gross profit rose 12.8% to $498.6 million in the reported quarter from $441.9 million in the year-ago period. (Read more: Lithia Motors' Q4 Earnings Miss Estimates, Up Y/Y)

AutoNation AN delivered fourth-quarter 2019 adjusted earnings of $1.31 per share, beating the Zacks Consensus Estimate of $1.15. Revenues amounted to $5,549 million compared with the $5,412 million recorded in the prior-year quarter. However, the top-line figure missed the Zacks Consensus Estimate of $5,571 million. During the reported quarter, new-vehicle revenues declined 1.3% year over year to $3.02 billion. Used-vehicle revenues rose 10.9% to $1.34 billion from the year-ago quarter’s figure. Revenues in the parts and service business gained 2.7% to $891.3 million from that reported in fourth-quarter 2018. Net revenues in the finance and insurance business amounted to $265.4 million, up 8.1% from the prior-year quarter. (Read more: AutoNation Q4 Earnings Surpass Estimates, Rise 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.

While General Motors has gained the most in the past week, Ford and Toyota have registered losses. In the past six months, Tesla has been the maximum gainer, while Ford has declined the most.

Company

Last Week

Last 6 Months

GM

3.5%

-4.5%

F

-0.1%

-8.4%

TSLA

1.2%

245.1%

TM

-1%

12.6%

HMC

2.3%

18.5%

HOG

0.7%

9.1%

AAP

0.1%

-1.5%

AZO

0.2%

0.4%

 

What’s Next in the Auto Space?

Investors are keenly awaiting quarterly results of a host of auto companies including S&P sector components namely Advance Auto Parts, Genuine Parts and LKQ Corporation that are scheduled to release next week.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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Click to get this free report Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report Toyota Motor Corporation (TM) : Free Stock Analysis Report The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report AutoNation, Inc. (AN) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Lithia Motors, Inc. (LAD) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research