American Axle Stays Neutral - Analyst Blog
28 Novembre 2011 - 11:45AM
Zacks
We are maintaining our Neutral recommendation on
American Axle & Manufacturing Holdings, Inc.
(AXL). American Axle is a leading supplier of driveline systems,
modules and components for the light vehicle market. The company
manufactures axles, driveshafts and chassis components for light
trucks, sport utility vehicles (SUVs) and passenger cars. The
company holds 38% share of the driveshaft market in the U.S. and
11% share across the world.
The company released its third quarter earnings on October 28,
2011. American Axle realized a profit of $38.3 million or 50 cents
per share compared with $38.8 million or 52 cents per share in the
third quarter of 2010 (all excluding special items). Net sales in
the quarter increased 5% to $647.6 million from $618.2 million in
the third quarter of 2010.
Gross profit dipped to $103.5 million or 16.0% of sales from
$113.9 million or 18.4% of sales. However, operating income came in
at $44.5 million or 6.9% of sales compared with $60.7 million or
9.8% in the year-ago quarter.
American Axle 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. The company estimates 2011 U.S. light vehicle sales to
increase to 12.5 million–13 million units from 11.6 million units
in 2010. It also anticipates sales to grow in excess of $3 billion
by 2013 on the back of new product launches.
The company is significantly expanding its manufacturing
footprint in Asia, where the growing demand for vehicles is
enhancing production volumes. The company 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.
Moreover, American Axle’s efforts of diversifying its customer
base are generating incremental revenue. Apart from General
Motors Company (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. It is
also developing customer relationships with Volkswagen to sell
shafts to its major division, Audi, as well as Renault,
Nissan Motor Co. Ltd. (NSANY), Tata Motors
Ltd (TTM), Mahindra, Cherry, Brilliance and others.
However, American Axle continues to have a high exposure to
General Motors and Chrysler. The constant price negotiations by the
major OEM customers are affecting the company.
In addition, American Axle is exposed to platforms that have
faced the maximum production cuts. The company derives a
substantial portion of its revenue from products supporting RWD
light truck and SUV platforms in North America whose sales and
output levels are being affected by a number of factors in the
recent times.
Considering all these, the shares of American Axle are also
maintaining a Zacks#3 Rank reflecting a short-term “Hold”
rating.
AMER AXLE & MFG (AXL): Free Stock Analysis Report
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis Report
NISSAN ADR (NSANY): Free Stock Analysis Report
PACCAR INC (PCAR): Free Stock Analysis Report
TATA MOTORS-ADR (TTM): Free Stock Analysis Report
VOLVO AB ADR B (VOLVY): Free Stock Analysis Report
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