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Auto Stock Roundup: GPI, JCI Earnings Beat; GT, CMI, CTB Miss

Zacks Equity Research

Several companies from the Auto sector that have reported earnings for the quarter under review in the past week are Group 1 Automotive, Inc. GPI, The Goodyear Tire & Rubber Company GT, Cummins CMI, Cooper Tire & Rubber Company CTB, and Johnson Controls International plc JCI.

Group 1 Automotive and Johnson Controls beat earnings estimates in the quarter under review while Goodyear, Cummins and Cooper Tire missed the same. On a year-over-year basis, Group 1 Automotive’s earnings improved while that of Goodyear, Cooper Tire & Rubber, and Johnson Controls declined.

Recap of the Week’s Most Important Stories

1.    Group 1 Automotive reported adjusted earnings per share of $2.83 in second-quarter 2019, beating the Zacks Consensus Estimate of $2.74. The bottom line improved from the prior-year quarter’s $2.45. Results were aided by a stellar performance in the United States despite softness in sales in the new vehicle market.

Reportedly, the company’s net income declined 12.8% year over year to $49.2 million. Revenues of $3.01 billion rose 2.1% year over year. Revenues beat the Zacks Consensus Estimate of $2.9 billion.

Revenues from new-vehicle retail sale rose 0.6% to $1.57 billion. The same from used-vehicle retail sale increased 2.1% to $838.9 million. Also, revenues from wholesale used-vehicle sale increased 3.4% to $96 million.

In the Parts and Service business, the top line improved 5.6% to $378.2 million. Revenues from the Finance and Insurance business rose 10.6% to $127.3 million.

Revenues in the U.S. business segment grew 15.1% year over year to $2.28 billion. The segment’s gross profit rose 7.4% year over year to $336.7 million. In the reported quarter, retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 20,318; 30,477 and 6,828, respectively.

Revenues fell 2.5% year over year to $614.4 million in the U.K. business segment. Gross profit was $64.1 million, marking a 14.3% fall from the second quarter of 2018. In the quarter, retail new-vehicle, retail used-vehicle and wholesale used-vehicle units sold were 9,266; 8,280 and 5,772, respectively. (Read more: Group 1 Automotive Q2 Earnings Beat Estimates, Up Y/Y)

Currently, Group 1 Automotive has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2.    Goodyear reported adjusted earnings per share of 25 cents in second-quarter 2019 compared with 62 cents in the prior-year quarter. Further, its earnings missed the Zack Consensus Estimate of 31 cents. It reported net income of $54 million, down from $157 million in the year-ago quarter.

The company delivered net revenues of $3.63 billion, lower than $3.84 billion in the year-ago quarter. Also, its revenues missed the Zacks Consensus Estimate of $3.66 billion. The year-over-year decline in revenues resulted from currency fluctuations as well as lower volume and sales from other tire-related businesses. These were partly offset by improvements in price/mix.

In the reported quarter, tire volume was 37.4 million units, down 4% from the year-ago quarter. Replacement tire shipments declined less than 1% from the year-ago quarter.

Segment operating income was $219 million, down from $324 million a year ago.

Revenues in the Americas segment declined year over year from $2.01 billion to $1.97 billion. The segment’s operating income was $134 million, down from $154 million in second-quarter 2018.

Revenues at the Europe, Middle East and Africa segment were $1.14 billion, down 9% year over year. The segment’s operating income declined 56% year over year to $44 million.

Revenues at the Asia Pacific segment declined 8% to $520 million. The segment’s operating income declined year over year to $41 million from $70 million. (Read more: Goodyear Earnings Miss Estimate in Q2, Decline Y/Y)

Currently, Goodyear has a Zacks Rank #3.

3.    Cummins reported earnings of $4.27 per share in second-quarter 2019, missing the Zacks Consensus Estimate of $4.38.

In the reported quarter, net income attributable to the company was $675 million in comparison with net income of $545 million in the prior-year quarter.

Its revenues improved 1% year over year to $6.2 billion in the reported quarter. However, the company’s revenues missed the Zacks Consensus Estimate of $6.36 billion. This year-over-year rise resulted from increased truck production in North America and strong demand in North America power generation markets, which were partly offset by lower demand in oil and gas, and international truck markets.

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose to $1.1 billion (17% of sales) from $897 million (14.6% of sales) recorded in the prior-year quarter.

Sales for the Engine segment were flat year over year at $2.7 billion. The segment’s EBITDA increased to $416 million (15.4% of sales) from $362 million (13.4% of sales) a year ago.

Sales for the Distribution segment grew 2% to $2 billion. The segment’s EBITDA rose to $172 million (8.5% of sales) from $145 million (7.3% of sales) a year ago.

Sales for the Components segment declined 2% to $1.8 billion. The segment’s EBITDA was $297 million (16.1% of sales) compared with the year-ago figure of $237 million (12.6% of sales).

Sales for the Power Generation segment were $1.2 billion. The segment’s EBITDA declined to $173 million (14.4% of sales) in second-quarter 2019 from $186 million (14.9% of sales) in the year-ago quarter.

Sales for the Electrified Power segment were $8 million while it witnessed EBITDA loss of $33 million. (Read more: Cummins Earnings and Revenues Miss Estimates in Q2)

Currently, Cummins has a Zacks Rank #3.

4.    Cooper Tire reported second-quarter 2019 adjusted earnings per share of 18 cents compared with 30 cents recorded in the prior-year quarter. Also, the bottom line missed the Zacks Consensus Estimate of 51 cents.

The company’s net sales declined 2.8% year over year to $679 million, which missed the Zacks Consensus Estimate of $719 million. Gross profit amounted to $99.1 million, up from $94.2 million recorded in the prior-year quarter.

Also, operating profit was $31.7 million compared with $32.8 recorded in second-quarter 2018.

Net sales in the Americas Tire Operations declined 0.4% year over year to $582 million. Operating profit in the segment rose 15.6% to $47 million despite new and incremental tariffs this year. Also, operating margin was 8% compared with 6.9% in the prior-year quarter.

Revenues in the International Tire Operations declined 17.5% to $139 million. Operating loss was $1 million against operating income of $6 million in the year-ago quarter. Operating margin was a negative 0.9% against a positive 3.4% in the prior-year quarter. The segment witnessed challenges from the ongoing decline within the new vehicle market in China and a weak replacement tire market in Europe. (Read more: Cooper Tire Lags Q2 Earnings and Revenue Estimates)

Currently, Cooper Tire has a Zacks Rank #5 (Strong Sell).

5.    Johnson Controls reported adjusted earnings per share of 65 cents in third-quarter fiscal 2019, surpassing the Zacks Consensus Estimate of 63 cents. Earnings were 81 cents per share in third-quarter fiscal 2018. The reported quarter witnessed solid organic revenue growth.

For the quarter under review, Johnson Controls reported revenues of $6.45 billion, up 3% year over year. Revenues surpassed the Zacks Consensus Estimate of $6.42 billion. In the quarter under review, its cost of sales grew to $4.31 billion from $4.19 billion in the year-ago quarter. Gross profit rose to $2.14 billion from $2.09 billion in the year-ago quarter.

Selling, general and administrative expenses in the fiscal third quarter totaled $1.39 billion, down from the prior-year quarter figure of $1.44 billion.

Here are the segment results:

Building Solutions North America: This segment’s adjusted revenues were $2.33 billion, rising from the year-ago quarter’s $2.25 billion. The segment’s EBITA declined to $310 million from $318 million in third-quarter fiscal 2018.

Building Solutions Europe, Middle East, Africa/Latin America: Adjusted revenues in this segment declined to $922 million from $926 million a year ago. Segment’s EBITA was $103 million, up from third-quarter fiscal 2018 level of $98 million.

Building Solutions Asia Pacific: Adjusted revenues in this segment rose to $691 million from $681 million a year ago. This segment’s EBITA was $98 million, up from third-quarter fiscal 2018 level of $97 million.

Global Products: Adjusted revenues in this segment rose to $2.51 billion from $2.43 billion a year ago. This segment’s EBITA was $481 million, up from third-quarter fiscal 2018 level of $441 million. (Read more: Johnson Controls Q3 Earnings, Revenues Top Estimates)

Currently, Johnson Controls has a Zacks Rank #4 (Sell).

Performance

In the past week, all these stocks, except for Harley-Davidson, Inc. HOG, have declined. Tesla, Inc. TSLA declined the most.

In the past six months, Tesla has declined the most while AutoZone, Inc. AZO has recorded the maximum gain.

Company Last Week Last 6 Months
GM -1.3% 3.6%
F -7.7% 9.5%
TSLA -8.8% -22.8%
TM -3% 5%
HMC -5.6% -12.4%
HOG 0.3% -2.1%
AAP -5% -6.7%
AZO -4.3% 29.1%


What’s Next in the Auto Space?

Watch out for the usual news and earnings releases over the next week.

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Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
AutoZone, Inc. (AZO) : Free Stock Analysis Report
 
Johnson Controls International plc (JCI) : Free Stock Analysis Report
 
Cummins Inc. (CMI) : Free Stock Analysis Report
 
Harley-Davidson, Inc. (HOG) : Free Stock Analysis Report
 
The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
 
Cooper Tire & Rubber Company (CTB) : Free Stock Analysis Report
 
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