Auto Stock Roundup: Earnings of PCAR, ORLY and Others Disappoint in Q1

The COVID-19 pandemic has resulted in unprecedented challenges for the auto sector, with factory closures, supply chain distortions and weak demand for vehicles amid low consumer sentiment. The bleak scenario is reflected in automakers’ quarterly reports that displayed year-over-year decline in earnings.

Carmakers have been suffering for a while, with closure of plants and beaten down sales due to the coronavirus pandemic. Automakers are expected to enforce new safety protocols to resume U.S. production. Notably, the Big 3 Detroit carmakers — General Motors, Ford and Fiat Chrysler — are negotiating with the UAW about reopening facilities.

While last to last week, many automakers unveiled their preliminary first-quarter 2020 results that highlighted coronavirus woes, various firms including two S&P sector components — PACCAR and O’Reilly — came out with their quarterly reports during the week ended Mar 24.

Recap of the Week’s Most Important Stories

1. PACCAR PCAR reported earnings of $1.03 per share in first-quarter 2020, missing the Zacks Consensus Estimate of $1.21, mainly due to lower income and revenues from the company’s trucks, parts and others unit. The reported figure also came in lower than the prior-year quarter’s $1.81 per share. Consolidated revenues (including trucks and financial services) came in at $5.16 billion, outpacing the Zacks Consensus Estimate of $5.04 billion. The top-line figure, however, came in lower than the year-ago quarter’s $6.49 billion. For the current year, the company has lowered its capex and R&D expenses forecast amid coronavirus crisis. Capex is now projected within $525-575 million and R&D expenses are estimated in the $265-$295 million band. (PACCAR Q1 Earnings Miss Estimates, Sales Top, Down Y/Y)

2. O’Reilly Automotive Inc. ORLY reported earnings per share of $3.97 in first-quarter 2020, surpassing the Zacks Consensus Estimate of $3.86. However, the bottom line compared unfavorably with $4.05 a share recorded in the prior-year quarter. O’Reilly’s quarterly revenues came in at $2,476.5 million, topping the consensus mark of $2,426 million. Moreover, the top line was higher than the prior-year level of $2,410.6 million. During the quarter, free cash flow totaled $227.2 million compared with $279.2 million a year ago. New stores opened during the quarter totaled 76, bringing the total store count to 5,533 as of Mar 31, 2020. (O'Reilly Tops Q1 Earnings Estimates, Scraps '20 View)

3. Lithia Motors, Inc. LAD reported adjusted earnings per share of $2.01 for first-quarter 2020, which beat the Zacks Consensus Estimate of $1.98. However, the bottom line decreased 18% from the prior-year quarter’s $2.44 per share. Total revenues fell 1.6% year over year to $2,803.8 million. The figure also missed the Zacks Consensus Estimate of $2,842 million. Revenues from new vehicles, used vehicles, F&I and service, and body and parts increased 4%, 22%, 18% and 6%, respectively, in the first two months of 2020. However, lockdown measures to contain the spread of coronavirus hit the company hard in March, which, in turn, dented overall operating results in the first quarter. (Lithia Motors' Q1 Earnings Top, Sales & EPS Down Y/Y)

4. Gentex Corporation GNTX reported first-quarter 2020 earnings per share of 36 cents, missing the Zacks Consensus Estimate by a penny. The bottom line also declined from the year-ago earnings of 40 cents per share. During the quarter under review, total revenues came in at $453.7 million, which missed the Zacks Consensus Estimate of $467 million. Moreover, the top line fell from the year-ago figure of $468.6 million.Gentex has downwardly revised its guidance for 2020. The company now envisions net sales in the band of $1.58-$1.67 billion, down from its previous guidance range of $1.91-$2 billion.Amid coronavirus-led uncertainty, Gentex is withdrawing revenue forecast for 2021. (Gentex Lags Q1 Earnings Estimates, Trims '20 View)

5. Autoliv, Inc. ALV reported adjusted earnings of 88 cents per share in first-quarter 2020, beating the Zacks Consensus Estimate of 58 cents. However, the bottom line decreased from the prior-year figure of $1.20 per share. The company reported net sales of $1,846 million in the quarter, down from the prior-year figure of $2,174 million. However, the figure beat the Zacks Consensus Estimate of $1,795 million. The firm expects to take a bigger hit in the second quarter on the back of factory closures by automakers. IHS Markit expects second-quarter light vehicle production to decline 45% in second-quarter 2020. Amid the gloomy scenario, Autoliv anticipates a sharp decline in earnings and sales, going forward. (Autoliv Beats on Q1 Earnings, Expects Q2 to be Rough)

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

In the past week, all the stocks have gained, with AutoZone being the maximum gainer. In the past six months, all stocks apart from Tesla have witnessed a decline.

What’s Next in the Auto Space?

Watch out for further impact of the pandemic on the auto sector. Car enthusiasts will also keep a close watch on April 2019 U.S. car sales data,  likely to come out by the end of the week. Investors in the auto sector will keenly await quarterly results of major auto companies including Harley-Davidson, Tesla TSLA and Ford F that are scheduled to release this week.

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Ford Motor Company (F) : Free Stock Analysis Report
 
PACCAR Inc. (PCAR) : Free Stock Analysis Report
 
O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
 
Autoliv, Inc. (ALV) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
 
Gentex Corporation (GNTX) : Free Stock Analysis Report
 
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