Auto Stock Roundup: AAP, GPC Beat On Earnings, CTB Misses, GM, THO In Focus

The earnings for the quarter ending Dec 31, 2017 has seen releases from auto companies like Cooper Tire & Rubber Co. (NYSE:CTB) , Genuine Parts Company (NYSE:GPC) and Advance Auto Parts, Inc. (NYSE:AAP) last week. Both the quarterly earnings and revenues for Genuine Parts Company and Advance Auto Parts surpassed the Zacks Consensus Estimates, while Cooper Tire & Rubber missed the same. On the basis of year-over-year performance also, both earnings and revenues came in higher for Genuine Parts Company and lower for Advance Auto Parts.

Earnings apart, General Motors Company (NYSE:GM) presented a plan to invest $2.8 billion over a period of 10 years to restructure its ailing South Korean operations. In a separate development, Thor Industries, Inc. (NYSE:THO) announced the creation of a 50/50 joint venture (“JV”) with New Zealand-based Tourism Holdings, Ltd. The collaboration is expected to provide maximum benefits of digital connectivity in the fast-growing international marketplace.

(Read the previous roundup here: Auto Stock Roundup for Feb 15, 2018)

Recap of the Week’s Most Important Stories

1. Thor, the leading manufacturer of RVs, announced the creation of a 50/50 JV with New Zealand-based Tourism Holdings. The company expects that the collaboration with the world’s largest RV rental and sales operator will provide maximum benefits of digital connectivity in the fast-growing international marketplace.

Notably, Thor strives at raising market share through investments in innovative products. Given its robust financial position and advantages that it obtained from U.S. tax reform legislation, the company is likely to invest in new exciting areas. Further, the company constantly evaluates investment opportunities, aimed at lowering debt and returning more to investors. The new JV is in sync with its strategic plans.

Thor will initially invest around $50 million in the JV called TH2. Subject to the fulfillment of certain customary closing conditions, the JV is anticipated to close by the end of February 2018.

It is estimated that TH2 will considerably increase the enjoyment and safety of RV-users through digital connectivity. This will perk up every aspect of RV with functions like trip planning and booking, roadside assistance, remote systems monitoring, campsite rental and peer-to-peer RV. Manufacturers, rental operators and RV dealers, who utilize TH2’s services and products, will experience enhanced efficiencies with respect to product pricing, fleet management and service engagement. (Read more: Thor Announces Joint Venture With Tourism Holdings)

Thor carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Per Reuters, General Motors has presented a plan to invest $2.8 billion over a period of 10 years to restructure its stressed South Korean operations. Additionally, the company has requested the South Korean government to inject funds for the investment through its state-run Korea Development Bank (“KDB”), which already holds a 17% stake in GM Korea.

The proposal is in addition to the company’s offer to convert around $2.2 billion of debt into equity, owed by its Korean operations, in exchange for financial support and tax benefits from the government.

These initiatives, to revive GM Korea, initiated after the Detroit-based automaker announced last week that it will shut down one of its four plants in South Korea as part of the restructuring of business in Asia. (Read more: General Motors Plans to Invest $2.8B in South Korea)

Thor carries a Zacks Rank #2 (Buy).

3. Advance Auto Parts reported adjusted earnings of 77 cents per share in the fourth quarter of fiscal 2017 (ended Dec 30, 2017), lower than $1 in the prior-year quarter. However, the figure surpassed the Zacks Consensus Estimate of 65 cents. Adjusted operating income declined to $113.7 million from $125.6 million in the fourth quarter of fiscal 2016.

The company reported revenues of $2.04 billion, beating the Zacks Consensus Estimate of $2.02 billion. Revenues were 2.2% lower than the year-ago quarter. During the quarter, comparable store sales were down 2.6% year over year.

Gross profit declined to $873.6 million in the reported quarter from $907.6 million a year ago. Gross margin declined 69 basis points year over year to 42.9%.

Adjusted selling, general and administrative (SG&A) expenses totaled $759.9 million or 37.3% of sales compared with $781.9 million or 37.5% of sales in the year-ago period.

In 2017, earnings came in at $5.37, lower than the 2016 figure of $7.15 per share. In 2017, total revenues also decreased to $9.37 billion from $9.57 billion in 2016. (Read more: Advance Auto Parts Q4 Earnings Top Estimates, Down Y/Y)

Advance Auto Parts carries a Zacks Rank #2.

4. Cooper Tire & Rubber reported adjusted earnings of 50 cents per share in the fourth quarter of 2017, missing the Zacks Consensus Estimate of 62 cents.

Cooper Tire registered net sales of $757 million, missing the Zacks Consensus Estimate of $770 million in comparison with the year-ago revenues of $784 million.

Operating profit was $47 million in the fourth quarter of 2017, down 55.4% from the year-ago quarter.

Americas Tire Operations registered a decrease of 7.1% in net sales to $645 million. Operating profit in this segment declined 47.8% to $61 million while operating margin decreased from 16.8% to 9.4%.

International Tire Operations recorded a rise of 30.5% in revenues to $162 million. Operating profit came in at $6 million, increasing from $1 million in the year-ago quarter. Operating margin rose to 3.7% from 1.1% in the year-ago quarter. (Read more: Cooper Tire’s Q4 Earnings, Revenues Miss Estimates)

Cooper Tire & Rubber carries a Zacks Rank #2.

5. Genuine Parts Company reported adjusted earnings of $1.12 per share, beating the Zacks Consensus Estimate of $1.11. Adjusted earnings per share in the year-ago quarter were $1.02.

The company recorded net income of $108.2 million in fourth-quarter 2017, down from $152.5 million in the prior-year quarter.

Genuine Parts reported net sales of $4.21 billion, up 11.3% year over year. The figure also surpassed the Zacks Consensus Estimate of $4.09 billion. Alliance Automotive Group (AAG), which was acquired in November 2017, contributed 6.8% in the sales figure.

Operating profit increased to $313.3 million from $276.3 million in fourth-quarter 2016. Selling, administrative and other expenses rose to $1 billion from $856 million a year ago. (Read more: Genuine Parts Q4 Earnings Beat Estimates, Up Y/Y)

Genuine Parts has a Zacks Rank #2.

Performance

Last week, maximum increase was registered by Advance Auto Parts while sharpest decline was witnessed by Harley-Davidson, Inc. (NYSE:HOG) .

In the last six months, the maximum rise was recorded by AutoZone, Inc. (NYSE:AZO) while Harley-Davidson shares declined the most.

What’s Next in the Auto Space?

Watch out for the earnings releases and other developments in the sector in the coming days.

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