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The Zacks Analyst Blog Highlights: Honda, Toyota, CNH, Ford and Tesla

Zacks Equity Research

For Immediate Release

Chicago, IL –September 6, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Honda Motors HMC, Toyota Motors TM, CNH Industrial CNHI, Ford F and Tesla, Inc. TSLA.

Here are highlights from Thursday’s Analyst Blog:

Auto Stock Roundup: CNH Spinoff, Ford Recall & More

Following a rough first half of the year, U.S. light-vehicle sales increased y/y for the second straight month in August, helped by five sales weekends due to the Labor Day holiday. Total sales of U.S. light vehicles in August came in at 921,567, marking 12.2% y/y growth. Notably, auto biggies like Honda Motors, Toyota Motors, Hyundai and Nissan drove the sales, registering maximum gains.

On the news front, CNH Industrial unveiled plans to separate the IVECO truck business from the agriculture and construction business, thereby creating two distinct world-leading businesses. Meanwhile, Ford recalled more than 550,000 trucks and SUVs in North America to resolve the vehicles' seat-back issue.

Recap of the Week’s Most Important Stories

1.    As part of the five-year plan to boost profits, CNH Industrial is set to separate the IVECO truck business from the agriculture and construction business, thereby creating two distinct world-leading businesses. Subject to certain precedent conditions, the industrial vehicle maker intends to complete the revamp by 2021, forming two independent publicly-listed companies in a bid to rev up asset values and optimize portfolio. The strategic spin-off holds the promise of unlocking significant value by maximizing focus, optimizing costs and delivering synergies.

Following a comprehensive portfolio review, CNH Industrial will split its business into two units — ‘On Highway’ and ‘Off-Highway’ businesses. The ‘Off-Highway’ assets, which contributed around $15.6 billion to 2018 pro-forma combined revenues, will comprise agricultural and construction business along with specialty vehicles. The ‘On-Highway’ assets, which represented 2018 pro-forma combined revenues of around $13.1 billion, will include the Iveco brand and powertrain business. (Read More: CNH Industrial's Spin-Off of IVECO Truck Unit to Unlock Value). CNH Industrial currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

2.   Ford has recalled more than 550,000 trucks and SUVs in North America to resolve an issue the vehicles' seat-back issue. Per the company, the third pawl required for seat-back strength may be missing from these vehicles. In case of a crash, this poorly-assembled recliner mechanism might be unable to restrain the passenger adequately, thus escalating the risk of injury. Nevertheless, Ford has stated that it is unaware of any crashes or injuries. The company’s latest action will affect 483,325 vehicles in the United States and the federal territories, 58,712 in Canada, and 8,149 in Mexico.

The affected vehicles include Ford F-150 from 2018-2020 models, Ford F-Series Super Duty trucks and Expedition vehicles from 2019 and 2020 models, and Explorer SUVs from 2018 through 2019. The safety recall also includes some 2020 Ford Explorer and Lincoln Aviator vehicles with rear seats, along with manual seat-back recliner mechanisms. (Read More: Ford Recalls 550K Vehicles to Resolve Seat-Back Issue)

3.   It seems that Elon Musk’s charisma during his recent two-day tour to China has paid off well, as Tesla, Inc. won exemption from 10% purchase tax on vehicle sales in China. Reportedly, the tax break was announced the same day Tesla’s enigmatic leader Musk met Chinese Transport Minister Li Xiaopeng. The tax reprieve to one of America’s high-profile company comes as a pleasant surprise amid the escalating U.S.-Sino trade war tiff.

The exemption is intended to benefit electric cars, primarily those manufactured in China. According to CNN Business, 34 carmakers were on the exemption list. This mainly applies to cars made by joint ventures between Chinese and foreign firms. The only foreign manufacturer that was granted an exemption on its own was Tesla. The tax break will lower the price that customers have to pay for Model 3, Model S or Model X Tesla cars. On an average, the exemption will reduce the cost of buying new Tesla car by 99,000 yuan. (Read More: Tesla Wins 10% Tax Exemption on China's Vehicle Sales)

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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