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American Axle & Manufacturing Holdings Inc. (AXL): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

Posted
2/11/2014 7:00:00 AM
By: Zacks.com
Referenced Stocks:AXL

Summary:
American Axle reported a 97% increase in earnings to $0.67 per share in the second-quarter 2014, which missed the Zacks Consensus Estimate by $0.04. The year-over-year upside in profits was driven by strong sales and increased production volumes of products that support the North American light vehicle segment. Revenues advanced 18.4% to $946.9 million, missing the Zacks Consensus Estimate of $982 million. American Axle is poised to benefit from a strong sales environment and product launches with the new advanced driveline technologies. Also, the product launches will diversify the company's business and drive profits along with consistent free cash flow generation. However, pricing pressure by original equipment manufacturers remains a concern. Therefore, we have maintained a Neutral recommendation on AXL.

Overview:

American Axle & Manufacturing Holdings, Inc. (AXL) is a leading supplier of driveline systems, modules and components for the light vehicle market. The company makes axles, driveshafts and chassis components for light trucks, sport utility vehicles (SUVs) and passenger cars. The company has a 38% share of the driveshaft market in the U.S. and an 11% share across the world. Driveline systems are components that transfer power from the engine to the driving wheels of a vehicle.

The principal manufacturing facilities of American Axle are located in the U.S. (Michigan, New York and Ohio), Brazil, Mexico, Germany, India, China, Japan and the U.K. Its major customers include General Motors and Chrysler. The North American market alone accounts for about 91% of annual revenues. Among the company's diverse products, rear and front axles as well as driveshafts contribute about 82% to annual sales, while drivetrain components, forged products, and others generate the remaining 18%. About two-thirds of sales are of light trucks.


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