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Auto Stock Roundup: WPRT & ADNT Quarterly Results, DDAIF Twin Deals & More

Last week, automotive equipment providers Westport Fuel Systems Inc. WPRT and Adient plc ADNT reported quarterly numbers. While Adient reported narrower-than-expected loss for fourth-quarter fiscal 2021, Westport disappointed investors by posting third-quarter 2021 loss against the consensus estimate of break-even. Meanwhile, auto retailers Lithia Motors LAD and Sonic Automotive SAH acquired dealerships in a bid to enhance their brand portfolio and widen reach. Daimler AG DDAIF also made headlines as it collaborated with Total Energies and Visa to step up its decarbonization goals and digital payment services, respectively.

China Association of Automobile Manufacturers unveiled the October vehicle sales data in the world’s largest car market, which once again made it evident that chip shortage has been wreaking havoc in the auto industry. Vehicle sales in the country declined 9.4% year over year to 2.33 million units, tumbling for the sixth consecutive month. Nonetheless, electric vehicles in China managed to sustain the momentum, with sales of new energy vehicles skyrocketing 135% to 383,000 units in October.

Recap of Last Week’s Important News

1. Westport posted third-quarter 2021 loss per share of 3 cents. The Zacks Consensus Estimate was pegged at break-even. The bottom line also deteriorated from earnings of 1 cent per share recorded in the year-ago period. The underperformance for the quarter under review can be attributed to higher operating expenses and unfavorable forex translations. Westport registered consolidated revenues of $74.3 million for the third quarter, rising 14% year over year. Yet, the top line missed the Zacks Consensus Estimate of $87 million.

Westport had cash and cash equivalents of $142 million as of Sep 30, 2021, up from $64.3 million at 2020-end. Long-term debt decreased to $33.3 million at the end of third-quarter 2021 from $45.7 million as of Dec 30, 2020.

Over the trailing four quarters, Westport topped the Zacks Consensus Estimate for earnings twice, missed once and matched on another occasion. The consensus mark for 2021 and 2022 earnings implies year-over-year growth of 220% and a decline of 85.8%, respectively. Shares of WPRT have tanked 44.4% year to date. The stock currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Lithia forayed into the North America powersports market with the acquisition of Pfaff Harley-Davidson in Toronto. This acquisition marks Lithia’s first motorcycle dealership and is in sync with the auto retailer’s proven success strategy of acquiring strong, high-performing franchises. The buyout will bring Lithia’s total annualized revenues acquired in 2021 to $6.3 billion, keeping the company well ahead of its schedule of network expansion. The firm remains on track to achieve its ambitious five-year plan to yield $50 billion in revenues and $50 in earnings per share by 2025.

The consensus mark for Lithia's 2021 earnings and sales implies year-over-year growth of 106.8% and 73.3%, respectively. Shares of LAD are up 10.3% year to date. The stock currently carries a Zacks Rank #3 (Hold).

3. Sonic announced the acquisition of Cook Volkswagen in Maryland, representing the firm’s fourth acquisition of the year. The latest buyout marks Sonic’s 89th franchised location and fourth Volkswagen dealership. The move aligns with the company’s strategy to enter new markets and attain $25 billion in revenues by 2025. Sonic has been back on the buyback mode this year as the company believes to have shored up the balance sheet to tap on to growth opportunities.

The consensus mark for Sonic's 2021 earnings and sales implies year-over-year growth of 96.8% and 26.7%, respectively. Shares of SAH have edged up 32.2% year to date. The stock currently carries a Zacks Rank #3.

4. Daimler inked a deal with TotalEnergies for decarbonization of the road freight in the European Union. Per the agreement, the companies will jointly build an ecosystem for hydrogen-fueled heavy-duty trucks. Daimler intends to supply hydrogen trucks to customers in the Netherlands, Belgium, Luxemburg and France by 2025. 

In a separate release, the Germany-based auto giant also announced that Daimler Mobility has teamed up with Visa to incorporate in-car payment features in vehicles. Effective spring 2022, customers of Daimler’s Mercedes-Benz will be able to make payments using a fingerprint sensor in the car. The company will initially roll out this payment solution for customers in the United Kingdom and Germany.  

The Zacks Consensus Estimate for Daimler's 2021 earnings and sales implies year-over-year growth of 273.1% and 12%, respectively. Shares of DDAIF have rallied 43.1% year to date. The stock currently carries a Zacks Rank #3.

5. Adient reported an adjusted loss per share of 24 cents for fiscal fourth-quarter 2021, narrower than the Zacks Consensus Estimate of a loss of 65 cents. The bottom line, however, compared unfavorably with the year-ago earnings of $1.15 per share.  For the reported quarter, Adient generated net sales of $2,771 million, down from $3,597 million recorded in the prior-year period. The top line also missed the Zacks Consensus Estimate of $3,013.2 million.

Adient had cash and cash equivalents of $1,521 million as of Sep 30, 2021 compared with $1,692 million on Sep 30, 2020. Long-term debt amounted to $3,512 million for the reported quarter, down from $4,097 billion on Sep 30, 2020. The firm expects fiscal 2022 revenues of $14.8 billion, indicating an increase from $13.7 billion recorded in fiscal 2021.

Over the trailing four quarters, Adient topped the Zacks Consensus Estimate for earnings thrice, with the average negative surprise of 131.1%. The consensus mark for fiscal 2022 and 2023 earnings implies year-over-year growth of 74% and 32.7%, respectively. Shares of ADNT have increased 35.8% year to date. The stock currently carries a Zacks Rank #5.

Price Performance

The following table shows the price movement of some of the major auto players over the past week and six-month period.

Image Source: Zacks Investment Research

What’s Next in the Auto Space?

Industry watchers will keep a tab on October passenger vehicle registrations in the European Union, likely to be released by the European Automobile Manufacturers Association this week. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes in business operations.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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Daimler AG (DDAIF): Free Stock Analysis Report
Westport Fuel Systems Inc. (WPRT): Free Stock Analysis Report
Sonic Automotive, Inc. (SAH): Free Stock Analysis Report
Lithia Motors, Inc. (LAD): Free Stock Analysis Report
Adient (ADNT): Free Stock Analysis Report
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