Auto Stock Roundup: TSLA Q3 Earnings, GM $2B Investment, HOG Recall & More

Last week, the third-quarter earnings season for the auto sector kicked off. So far this earnings season, just two S&P stocks from the auto sector, namely PACCAR PCAR and Genuine Parts GPC, came up with quarterly numbers. Various other auto firms including the red-hot electric vehicle (EV) company Tesla TSLA, auto retailers namely Lithia Motors, Penske Automotive and AutoNation, as well as recreational vehicle maker Winnebago WGO unveiled quarterly numbers. Encouragingly, all the above-mentioned companies managed to deliver earnings beat. 

Meanwhile, U.S. auto giant General Motors GM grabbed limelight as it continues to step up its EV game. The firm announced plans to spend $2 billion to convert the Tennessee assembly plant to manufacture green vehicles. It also unveiled the first look of 2022 GMC Hummer EV sport utility truck. On the contrary, Harley-Davidson HOG recalled more than 1,000 LiveWire bikes in the United States.

(Read the Last Auto Stock Roundup here).

Recap of the Week’s Most Important Stories

1. Tesla reported stellar results for third-quarter 2020, posting profit for the fifth consecutive quarter. The company reported earnings of 76 cents, which topped the Zacks Consensus Estimate of 55 cents per share. The bottom line also compared favorably with the year-ago earnings of 37 cents a share. Total revenues came in at $8,771 million, surpassing the consensus mark of $8,225 million. The top line also witnessed year-over-year growth of 39%. Tesla has maintained the target of 500K deliveries for full-year 2020. Importantly, the firm generated free cash flow of $1,395 million during the quarter. The metric compared favorably with $418 million and $371 million recorded in the prior quarter and the year-ago period, respectively. (Tesla Q3 Earnings Beat, '20 Delivery Target Intact)

2. General Motors recently announced the decision to invest $2 billion in its Spring Hill, TN assembly plant. This will facilitate the transition of the assembly plant to become the company’s third vehicle production facility for manufacturing electric vehicles (EV).Its two existing EV manufacturing plants are Factory Zero in Detroit and Hamtramck, MI, and Orion Assembly in Orion Township, MI. The new luxury Cadillac LYRIQ will be the first EV to be manufactured at Spring Hill, along with the conventional combustion engine-powered Cadillac XT6 and XT5 luxury SUV crossovers, making the plant at Spring Hill not 100% electric, unlike the Factory Zero and Orion Assembly plants. (General Motors Revs Up EV Game, To Invest $2B in U.S. Plant)

3. Harley-Davidson recently issued a voluntary safety recall for certain 2020 LiveWire electric motorcycles due to a potential software defect. Per National Highway Traffic Safety Administration, the recall has been issued due to reports that a few of the 2020 LiveWire motorcycles have electric powertrains that unexpectedly initiate a shutdown without providing a clear notification to the rider that the shutdown sequence has started. In some cases, the vehicle does not restart after the sudden shutdown due to a software defect in the Onboard Charging system.It is estimated that about 1,012 bikes have been recalled by the company for a software update in lieu of customers’ interests and safety. (Harley-Davidson Recalls LiveWire Bikes for Software Defect)

4. PACCAR reported third-quarter 2020 net earnings per share of $1.11, which surpassed the Zacks Consensus Estimate of 96 cents. However, the earnings figure was lower than the prior-year quarter’s $1.75. The trucking giant registered consolidated revenues (including trucks and financial services) of $4.94 billion, which surpassed the Zacks Consensus Estimate of $4.24 billion. The top-line figure, however, was lower than the year-ago quarter’s $6.37 billion.The company targets to invest $575-$625 million in capital projects and $330-$360 million in R&D expenses next year. (PACCAR's Q3 Earnings & Sales Beat Estimates, Down Y/Y)

5. Genuine Parts reported third-quarter adjusted earnings of $1.63 per share, which surpassed the Zacks Consensus Estimate of $1.48. Moreover, the bottom line was higher than the year-ago quarter’s profit of $1.39 per share. This Atlanta-based automotive replacement parts supplier reported net sales of $4,370 million, which missed the Zacks Consensus Estimate of $4,459 million. Moreover, the top-line figure was lower than the year-ago quarter’s $4,525 million, marking a 3.4% year-over-year decline. Genuine Parts had cash and cash equivalents worth $900.1 million as of Sep 30, 2020. Long-term debt decreased to $2,700.6 million from $2,795.9 million recorded in the year-ago period. (Genuine Parts' Q3 Earnings Beat, Sales Miss Estimates)

6. Winnebago Industries reported fourth-quarter fiscal 2021 (ended Aug 29, 2020) adjusted earnings per share of $1.45, handily surpassing the Zacks Consensus Estimate of 90 cents. The bottom line also compared favorably with the year-ago earnings of $1 per share, marking a year-over-year jump of 45%. It registered revenues of $737.8 million for the August-end quarter, beating the Zacks Consensus Estimate of $693 million. Moreover, the top line recorded a 39.1% year-over-year increase. Winnebago is highly optimistic about fiscal 2021 on solid outdoor RV demand. (Winnebago's Q4 Earnings & Sales Beat Estimates, Up Y/Y)

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 six months, all stocks have increased, with Tesla being the maximum gainer. Over the past week, all stocks have gained apart from Tesla.

What’s Next in the Auto Space?

A host of auto biggies are slated to report their quarterly numbers this week. Investors are keenly awaiting quarterly results of U.S. auto giant Ford, Germany-based Volkswagen, and auto parts suppliers including LKQ Corp and O’Reilly Automotive.

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PACCAR Inc. (PCAR): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
HarleyDavidson, Inc. (HOG): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
Winnebago Industries, Inc. (WGO): Free Stock Analysis Report
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