Auto Stock Roundup: TSLA & LAD Beat on Q2 Earnings, GNTX Posts Disappointing Results

Last week, a number of auto companies came up with second-quarter results. The red hot EV maker Tesla smashed forecasts and posted the fourth consecutive quarterly profit, which qualifies it for inclusion in the S&P 500 list. While earnings of most of the companies topped estimates, the bottom line compared unfavorably with the year-ago levels. The top line of all the firms including Tesla, Lithia Motors, AutoNation, PACCAR and Gentex recorded a year-over-year decline amid coronavirus-led reduced demand.

Meanwhile, a spike in COVID-19 cases in states like Michigan, Missouri and Kentucky is aggravating concerns for U.S. automakers. Auto companies are struggling to keep factories operational amid high absenteeism. While Ford and Fiat Chrysler are recruiting temporary employees, General Motors is shuffling around its staffing schedule. While safety protocols are in place, workers are scared of rising infections and the industry fears another partial or full shutdown of factories.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

1. Tesla TSLA reported second-quarter earnings per share of $2.18 against the Zacks Consensus Estimate of a loss of 49 cents. This outperformance stemmed from higher-than-anticipated revenues, which came in at $6,036 million, beating the consensus mark of $4,964 million. While the bottom line improved significantly from the prior-year quarter’s loss of $1.12 per share, the top line recorded a decline of 5%. Tesla maintains the target of exceeding 500,000 vehicle deliveries in 2020 despite the recent production interruptions.The company announced that it has chosen Austin to build the fifth Gigafactory.

2. Lithia Motors, Inc. LAD reported adjusted earnings of $3.72 per share in second-quarter 2020, beating the Zacks Consensus Estimate of $1.51. The bottom line also increased 26% from the prior-year quarter’s $2.95 per share on the back of operational efficiency. Total revenues fell 14.4% year over year to $2,758.6 million. However, the top line surpassed the Zacks Consensus Estimate of $2,318 million. Despite coronavirus-led uncertainty that has prompted many companies to suspend payouts, Lithia Motors continues to pay dividends, in turn preserving shareholder value. In fact, the board recently hiked the payout by a penny per share.

3. AutoNation Inc. AN reported second-quarter 2020 adjusted earnings of $1.41 per share, which beat the Zacks Consensus Estimate of 36 cents.During the reported quarter, its revenues amounted to $4,533 million compared with $5,343.8 million recorded in the prior-year period. However, the top line surpassed the Zacks Consensus Estimate of $4,039 million. Importantly, AutoNation announced planned expansion of stand-alone pre-owned vehicle sales and service centers in the United States. It plans to build at least 20 additional stores over the next three years. 

4. PACCAR Inc. PCAR reported earnings of 43 cents per share for second-quarter 2020, beating the Zacks Consensus Estimate of 31 cents. However, the reported figure was lower than the prior-year quarter’s $1.78 per share. Consolidated revenues (including trucks and financial services) came in at $3.06 billion, surpassing the Zacks Consensus Estimate of $2.93 billion. The top line, however, was lower than the year-ago quarter’s $6.63 billion. The company has reiterated capex and R&D expenses projection for the ongoing year. Capex is projected within $525-$575 million, and R&D expenses are estimated in the $265-$295 million band.

5. Gentex Corporation GNTX reported second-quarter 2020 earnings per share of 2 cents, missing the Zacks Consensus Estimate of 12 cents. The bottom line also declined from the year-ago earnings of 42 cents per share. Total revenues came in at $229.93 million, which missed the Zacks Consensus Estimate of $262 million. Moreover, the top line fell from the year-ago figure of $468.7 million. Gentex has provided guidance for the second half of 2020. The company envisions net sales in the band of $865-$915 million. Gross margin is anticipated in the range of 36-37%. Capex and operating expenses are estimated within $30-$40 million and $88-$93 million, respectively.

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, Tesla, Toyota and Honda have declined. In the past six months, all stocks have slid apart from Tesla, Advance Auto Parts and AutoZone.

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 July 2020 U.S. car sales data, which is likely to come out by the end of the week. Investors in the auto sector are keenly awaiting quarterly results of major auto companies including General Motors GM and Ford F that are scheduled to release this week.

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PACCAR Inc. (PCAR): Free Stock Analysis Report

AutoNation, Inc. (AN): Free Stock Analysis Report

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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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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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