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Auto Stock Roundup: Volkswagen to Build Plants in China, Magna Q1 Earnings Miss

Zacks Equity Research

Several companies from the Zacks Auto sector — including Superior Industries International, Inc. SUP, Westport Fuel Systems Inc. WPRT, Magna International Inc. MGA and Tenneco Inc. TEN — reported financial results for the quarter ending on Mar 31, 2019 in the past week.

During the first quarter of 2019, Westport Fuel’s earnings and revenues surpassed estimates while Superior Industries’ earnings and revenues missed the same. Further, Magna and Tenneco posted an earnings miss. On the revenue front, while Magna reported a beat, Tenneco was almost in line with estimates.

Recap of the Week’s Most Important Stories

1.    Superior Industries reported adjusted loss of 22 cents in first-quarter 2019, wider than the Zacks Consensus Estimate of a loss of 15 cents. The company reported adjusted earnings per share of 15 cents in first-quarter 2018.

Net sales were $357.7 million in the reported quarter, missing the Zacks Consensus Estimate of $364 million. The reported figure was lower than $386.4 million recorded in the year-ago quarter. This quarterly decline resulted from lower volume, weaker Euro and reduced aluminum prices, which were partly offset by improved product mix.

During the first quarter, the company’s wheel unit shipments declined 9.17% year over year to 5 million. This decline primarily resulted from reduced shipments in North America, with some softness in Europe. Gross profit fell to $33.1 million from $50 million in the year-ago quarter.

Selling, general and administrative expenses contracted to $14.5 million in first-quarter 2019 from $22.4 million a year ago due to reduced integration-related expenses.

At the end of the reported quarter, Superior Industries’ net cash provided by operating activities was $28.7 million compared with $14.4 million in the year-ago period. Capital expenditure totaled $13.4 million, marking a decrease from $22.7 million recorded in the prior-year quarter. (Read more: Superior Industries Q1 Earnings & Revenues Lag Estimates).

Superior Industries currently carries a Zacks Rank #3 (Hold).

2.    Westport Fuel’s first-quarter 2019 net loss from continuing operations was 2 cents per share, narrower than the Zacks Consensus Estimate of loss of 5 cents. Net loss per share from continuing operations was 10 cents in first-quarter 2018. Net loss from continuing operations in the reported quarter was $3 million compared with $12.6 million in first-quarter 2018.

Westport Fuel logged consolidated revenues of $73.2 million in the reported quarter, up 15% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $67 million. This upside was driven by increased aftermarket revenue generation and Westport HPDI 2.0 shipments.

During the quarter under review, consolidated gross margin increased to $17.2 million from $14.6 million in the year-ago quarter. This increase resulted from higher revenues.

Adjusted EBITDA amounted to $7.3 million against negative $3.4 million in the prior-year quarter.

In the reported quarter, CWI revenues rose $40.1 million to $92.3 million.

Westport Fuel had cash and cash equivalents of $46 million as of Mar 31, 2019, down from $61.1 million as of Dec 31, 2018.

At the end of first-quarter 2019, net cash flow used for operating activities in continuing operations was $15.2 million in comparison with the prior year’s $12.9 million. (Read more: Westport Fuel Q1 Earnings & Revenues Beat Estimates)

Westport Fuel currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3.    Magna delivered adjusted earnings per share of $1.63 in first-quarter 2019, missing the Zacks Consensus Estimate of $1.73. Further, the bottom line was lower than the year-ago quarter’s figure of $1.84.

Revenues decreased 2% year over year to $10.6 billion. However, the top line surpassed the Zacks Consensus Estimate of $10.5 billion. This plunge in sales was due to a 7% decline in global light-vehicle production, which includes a 17% slump in China, and 3% decline in North America and Europe each.

Adjusted EBIT declined to $720 million from the year-ago figure of $875 million.

Revenues at the Body Exteriors & Structures segment decreased 3% year over year to $4.3 billion in the reported quarter. Adjusted EBIT rose to $363 million from the prior-year quarter’s figure of $343 million.

Revenues at the Power & Vision segment decreased 1% year over year to $3.1 billion. Adjusted EBIT declined to $216 million from $359 million in first-quarter 2018.

Revenues from the Seating Systems segment declined 3% year over year to $1.43 billion in the quarter under review. Adjusted EBIT declined to $94 million from $130 million recorded in the prior year.

Revenues at the Complete Vehicles segment increased 16% year over year to $1.93 billion. Adjusted EBIT increased to $28 million from $19 million in first-quarter 2018. (Read more: Magna Earnings Lag Estimates in Q1, Revenues Beat)

Magna currently carries a Zacks Rank #3.

4.    Tenneco reported first-quarter 2019 results, wherein adjusted earnings per share of 52 cents missed the Zacks Consensus Estimate of 94 cents. Also, the company’s bottom line declined from the prior-year quarter figure of $1.62 per share.

In the reported quarter, Tenneco’s adjusted net income was $42 million compared with $83 million in first-quarter 2018.

Quarterly revenues rose 74% year over year to $4.5 billion, almost in line with the Zacks Consensus Estimate. On a constant-currency basis, organic revenues rose 4%, and net revenue growth from acquisitions and divestitures was 75%, partly offset by 5% negative impact of currency translation.

Adjusted EBITDA (income before interest expenses, income taxes, non-controlling interests and depreciation, and amortization) was $327 million compared with $212 million recorded in the prior-year quarter. Apart from the acquired Federal-Mogul business, the figure includes weaker aftermarket and China OE volume, and related operational inefficiencies. (Read more: Tenneco Lags Q1 Earnings Estimates, Lowers 2019 Outlook)

Tenneco currently carries a Zacks Rank #5 (Strong Sell).

5.    Volkswagen AG VWAGY is building two manufacturing plants, per Bloomberg. The aim of the company is to produce 600,000 electric vehicles (EVs) on its dedicated battery-car platform, Modular Electrification Toolkit (MEB). The new factories in Anting and Foshan will open next year. With this, the German auto giant will be able to catch up with Tesla, Inc.’s TSLA capacity to manufacture electric vehicles.

Herbert Diess, the chief executive officer of Volkswagen, says that the company leads the competition on e-mobility with the right products, better groundwork and economies of scale. It intends to produce about 70 battery-powered models across its 12 auto brands by 2028 and make 22 million EVs over the next decade.

Notably, in April, the company revealed that it plans to build fully-electric sports utility vehicles for China, the largest car market of the world. This move is in sync with the company’s aggressive growth strategy in China, where electric vehicle manufacturers are treated preferentially. Also, the proposed launch of the fully-electric vehicles by Volkswagen in China from 2021 is aimed at competing with Tesla’s Model X. In fact, Tesla’s sole assembly plant operating in Fremont, CA, can manufacture about 500,000 vehicles. (Read more: Volkswagen to Build Electric Vehicle Plants in China).

Volkswagen currently carries a Zacks Rank #3.

Performance

Last week, all these stocks, except for Ford Motor Company F, declined. Tesla stock declined the most.

In the last six months, AutoZone, Inc. AZO gained the maximum while Tesla declined the most.

Company Last Week Last 6 Months
GM -2.2% 4.8%
F 0.2% 12%
TSLA -5.3% -34.4%
TM -0.9% 3%
HMC -3.4% -7.9%
HOG -3.5% -13%
AAP -1.8% -12.3%
AZO -2.7% 18%



What’s Next in the Auto Space?

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

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