American Axle Remains Neutral - Analyst Blog
06 Luglio 2011 - 1:15PM
Zacks
We reiterate our Neutral recommendation on American Axle
& Manufacturing Holdings Inc. (AXL),
which 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.
American Axle released its 2011 first quarter results on April
29, 2011. The company reported a profit of $37.7 million
or 50 cents per share, almost doubling from $16.3 million or 22
cents per share in the year-ago quarter.
Revenues in
the quarter grew 24% to $645.6 million. Customer production volumes
for the North American light truck and SUV programs that the
company currently supports for General Motors
Company (GM) and Chrysler went up 11%
from the prior-year the quarter. The company also expects sales to
grow more than 5% to $2.4 billion in 2011, driven by the rebound in
U.S. auto sales and turnaround performances of both of its highly
exposed customers, GM and Chrysler.
American
Axle’s cash flow has improved. In 2010, the company’s operating net
cash flow improved significantly to $240.3 million from $15.9
million in 2009 due to higher income.
The company
is currently undergoing a significant expansion of its
manufacturing footprint in Asia, where growing demand for vehicles
is enhancing production volumes. It expects to accelerate the
expansion of its high quality, cost-competitive and operationally
flexible global manufacturing footprint in Brazil, China, India,
Mexico, Poland and Thailand.
Apart from
manufacturing facilities, it also has business and engineering
offices in Japan, China, India and South Korea. The company’s
backlog of new and incremental business launched from 2010 to 2014
is valued at $1 billion.
In addition,
American Axle’s efforts at diversifying its customer base are
generating incremental revenue. Apart from GM and Chrysler, the
company supplies driveline systems and other components to
PACCAR
Inc. (PCAR),
Volvo
AB (VOLVY),
Ford
Motor Co. (F) and various other
OEMs.
However,
American Axle’s high exposure to a few large clients has made its
business more vulnerable to risks. Moreover, the major OEM
customers are constantly demanding concessions from suppliers in
the form of lower prices. This has been affecting the company
negatively. Another threat is the company’s considerable exposure
to platforms that have faced the maximum production
cuts.
AMER AXLE & MFG (AXL): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
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