On Feb 14, we downgraded driveline systems manufacturer,
American Axle and Manufacturing Inc.
), to Underperform based on the company's poor performance in the
fourth quarter of 2012 and risks arising from the sluggish demand
for SUVs, high commodity costs and pricing pressure from OEMs.
Why the Downgrade?
American Axle reported a loss of $1.7 million or 2 cents per
share in the fourth quarter compared with a profit of $35.9
million or 47 cents in the year-ago quarter. The company's loss
considerably lagged the Zacks Consensus Estimate of a profit of
17 cents. Revenues increased 21.6% year over year to $736.7
million during the quarter, surpassing the Zacks Consensus
Estimate of $733 million.
Following the release of the fourth quarter results, the Zacks
Consensus Estimate for 2013 decreased 10.1% to $1.79 per share.
Moreover, the Zacks Consensus Estimate for 2014 also went down
6.5% to $2.46 per share. With the Zacks Consensus Estimates for
both 2013 and 2014 going down, the company retains a Zacks Rank
#5 (Strong Sell).
American Axle remains challenged by constant pricing pressure
from the major OEM. In addition, the company is exposed to
platforms, which faces maximum production cuts. Sales and output
levels of RWD light truck and SUV in North America are declining
over time, which occupies a substantial portion of the company's
Nevertheless, the company focuses on diversifying its customer
base, which will enhance its revenues. It develops customer
relationships with auto companies including Renault,
Nissan Motor Co.
), Tata, Mahindra, Cherry, Brilliance and others.
Other Stocks to Consider
Commercial Vehicle Group Inc.
) are performing well in the same industry where American Axle
operates. Both hold a Zacks Rank #1 (Strong Buy).
AMER AXLE & MFG (AXL): Free Stock Analysis
COMML VEHICLE (CVGI): Free Stock Analysis
NISSAN ADR (NSANY): Free Stock Analysis
OSHKOSH CORP (OSK): Free Stock Analysis
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