The third-quarter earnings season kicked off for the auto sector, with Harley-Davidson, Inc. (NYSE:HOG) marginally beating earnings estimates and Winnebago Industries, Inc. (NYSE:WGO) reporting in-line earnings.
Meanwhile, Tesla Motors, Inc. (NASDAQ:TSLA) announced that all its new cars will be fitted with fully-self-driving hardware. Toyota Motor Corporation (NYSE:TM) announced a research and development (R&D) partnership with Suzuki Motor Corporation. Further, Honda Motor Co., Ltd. (NYSE:HMC) announced plans to build a new plant in China.
Recap of the Week’s Most Important Stories
1. Tesla revealed that all of its vehicles produced from Oct 19 onward will be fitted with the necessary hardware for full self-driving capability. These include eight surround cameras, 12 updated ultrasonic sensors, a forward-facing radar with enhanced processing capability, and a new onboard computer with 40 times more computing power.
Tesla currently carries a Zacks Rank #4 (Sell).
2. Harley-Davidson reported earnings of 64 cents per share in the third quarter of 2016 that beat the Zacks Consensus Estimate by a penny. However, earnings were lower than 69 cents recorded in the year-ago quarter.
Consolidated revenues fell to $1.27 billion from $1.32 billion in the third quarter of 2015.Revenues from Motorcycles and Related Products dropped to $1.09 billion in third-quarter 2016 from $1.14 billion in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1.11 billion.
Harley-Davidson reaffirmed its guidance for motorcycle shipments in 2016 at 264,000–269,000 units. In the fourth quarter of 2016, it expects to ship 44,200−49,200 motorcycles, compared with 48,149 motorcycles shipped in the year-ago period (read more: Harley-Davidson Q3 Earnings Beat, Revenues Miss).
Harley-Davidson currently carries a Zacks Rank #3 (Hold).
3. Winnebago recorded earnings of 49 cents per share in the fourth quarter (ended Aug 27, 2016) of fiscal 2016, 14% higher than 43 cents earned in the prior-year quarter. Also, the figure was in line with the Zacks Consensus Estimate.
Revenues rose 4.9% to $263.3 million from $251 million in the prior-year quarter. Moreover, the figure outpaced the Zacks Consensus Estimate of $252 million. The year-over-year improvement in the top line was driven by higher shipments of motorized units and towables. Meanwhile, revenues were affected by the company’s decision to stop selling aluminum extrusions (read more: Winnebago's Q4 Earnings Meet Estimates, Rise Y/Y).
Winnebago currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
4. Honda announced plans to build a new plant in China with the aim to expand production in the nation. The plant is expected to start production in 2019 with an initial production capacity of 120,000 units. The capacity is expected to double to almost 240,000 vehicles in the future.
Currently, Honda carries a Zacks Rank #3.
5. Toyota and Suzuki have announced their joint decision on a business partnership for developing technology to support their products in a rapidly evolving auto industry. Both companies intend to continue competing in a fair manner but collaborate in terms of R&D (read more: Toyota Assesses R&D Partnership, Recalls 340K Prius Globally).
Toyota carries a Zacks Rank #3.
Performance
The performance of auto sector companies was mixed last week. Harley-Davidson was the biggest gainer, while Advance Auto Parts lost the most among the stocks listed below.
Over the long term too Harley-Davidson gained maximum, while Tesla was the worst loser.
Company | Last 1-Week Period | Last 6 Months |
GM | +0.5% | -1.1% |
F | +0.4% | -12.0% |
TSLA | +1.0% | -18.6% |
TM | -0.2% | +9.6% |
HMC | 0.0% | +3.1% |
HOG | +9.1% | +16.6% |
AAP | -3.9% | -10.2% |
AZO | -1.5% | -3.4% |
What’s Next in the Auto Space?
Many auto companies, including General Motors Company (NYSE:GM) , Penske Automotive Group, Inc. (NYSE:PAG) , Tesla and Ford, will release their third-quarter financial results in the coming week.
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PENSKE AUTO GRP (PAG): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
WINNEBAGO (WGO): Free Stock Analysis Report
HARLEY-DAVIDSON (HOG): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
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