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American Axle (AXL) Q4 Earnings Beat Estimates, Rise Y/Y

American Axle & Manufacturing Holdings Inc.AXL posted adjusted earnings of 78 cents per share for the fourth quarter that comfortably beat the Zacks Consensus Estimate of 69 cents. Earnings also increased from 67 cents recorded in the fourth quarter of 2015.

The company reported net income of $46.9 million or 59 cents per share in the fourth quarter of 2016 compared with $62.9 million or 81 cents in the year-ago quarter.

Revenues decreased to $946.5 million in the reported quarter from $958.4 million a year ago. However, the top line fell short of the Zacks Consensus Estimate of $956 million.

American Axle's content-per-vehicle - dollar value of product sales supporting customers' North American light truck and sport utility vehicle ("SUV") programs - dropped to $1,634 from $1,645 in fourth-quarter 2015. The company's non-General Motors Company GM sales declined to $323 million from $323.5 million in the year-ago quarter.

Gross profit increased to $176.1 million (18.6% of sales) in fourth-quarter 2016 from $159.8 million (16.7% of sales) in the prior-year quarter. Meanwhile, adjusted operating income increased to $91.7 million from $87.1 million a year ago.

American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise

American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise | American Axle & Manufacturing Holdings, Inc. Quote

2016 Results

American Axle recorded earnings of $3.30 per share in 2016, beating the Zacks Consensus Estimate of $3.17. In comparison, the company generated adjusted earnings of $2.88 per share in 2015.

Revenues increased 1.3% to $3.95 billion in 2015 from $3.90 billion in 2014. However, the figure marginally missed the Zacks Consensus Estimate of $3.97 billion.

Financial Position

American Axle had cash and cash equivalents of $481.2 million as of Dec 31, 2016, up from $282.5 million as of Dec 31, 2015. Long-term debt was $1.4 billion as of Dec 31, 2017, compared with $1.38 billion at the end of 2015.

Cash flow from operations in 2016 was $407.6 million, compared with $377.6 million in 2015. Net capital spending of the company was $221.3 million in 2016, compared with $193.2 million in the prior year. American Axle's free cash flow was $198.6 million in 2016 compared with $189.5 million a year ago.

2017 Outlook

For 2017, sales are expected in the range of $4.1 billion to $4.2 billion, marginally higher than $3.95 billion recorded in 2016. The sales expectation is based on the launch of programs in the company's new and incremental business backlog. The company also assumes that U.S. industry sales on a seasonally adjusted annualized rate ("SAAR") basis will be around 17.5 million light vehicle units in 2017.

Earnings before income taxes, depreciation and amortization (EBITDA) margin will likely be in the range of 15.5%-16% in 2017. For 2017, American Axle expects free cash flow in the range of $175−$200 million. In addition, capital spending will be around 6.5% to 7% of sales this year.

Price Performance

Over the last three months, American Axle's share price increased 41.3% while the Zacks categorized Auto/Truck-Original Equipment industry saw a 16.7% increase. Share price will benefit from its backlog of new and incremental business launches, along with its efforts to boost non-GM sales.

Zacks Rank & Key Picks

American Axle currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the auto space include Honda Motor Co., Ltd. HMC , Fox Factory Holding Corp FOXF and General Motors Company.

Fox Factory sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth rate of around 16.6% for the current year. You can see the complete list of today's Zacks #1 Rank stocks here.

Meanwhile, Honda and General Motors carry a Zacks Rank #2 (Buy). Honda has an expected earnings growth rate of around 27% for the current year, while the same for General Motors is pegged at 9.4%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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