Auto Stock Roundup: ABG's $3.2B Deal, THO and KMX's Quarterly Results & More
Asbury's (ABG) deal to acquire Larry H. Miller Dealerships and TCA for $3.2 billion creates buzz. Thor's (THO) fiscal Q4 earnings top estimates, whereas CarMax's (KMX) fiscal Q2 profits disappoint.
Last week, auto biggies released U.S. auto sales data for the third quarter of 2021. Vehicle sales took a nasty hit amid aggravating chip crunch and low inventories. U.S. auto giant General Motors GM suffered the worst blow, with third-quarter sales slumping 33% year over year to 446,997 units. Ford will report delivery numbers today. Japan-based automakers Honda and Nissan witnessed a year-over-year sales decline of 11% and 10%, respectively. Toyota was an outlier as its sales edged up 1.4% for the quarter under review. Volkswagen — Germany’s #1 automaker — recorded an 8.1% drop in U.S. vehicle sales during the three months ended Sep 30. Meanwhile, its close peer BMW AG saw a 4.4% increase in deliveries. Meanwhile, per JD Power, the average price of a new vehicle hit a new record of $42,802 last month, breaking August’s record of $41,528.
Last Week’s Top Stories
Asbury Automotive Group ABG announced a mega deal to acquire Larry H. Miller Dealerships, the eighth largest dealership in the United States, and Total Care Auto (TCA), powered by Landcar, for $3.2 billion. The acquisition of Larry H. Miller Dealerships seeks to add nearly $5.7 billion in Asbury’s expected annualized revenues, giving the company an edge to execute its five-year plan to generate $20 billion in annual revenues by 2025. The acquired assets will include 54 new and seven used-vehicle dealerships along with 11 collision centers. The deal is also likely to enhance the scope of Asbury’s Clicklane omni-channel platform. Meanwhile, the buyout of TCA presents Asbury with an opportunity to enter the profitable F&I business.
Thor Industries THO posted fourth-quarter fiscal 2021 (ended Jul 31, 2021) adjusted earnings of $4.12 per share, which beat the Zacks Consensus Estimate of $2.91 and jumped 92.5% year over year. It registered revenues of $3,593 million for the quarter under review, topping the Zacks Consensus Estimate of $3,274 million and rising 54.6% on a year-over-year basis. Sales from North American Towable, North American Motorized, and European segments surged 46.4%, 124.6%, and 31.1%, respectively, on a year-over-year basis. Consolidated backlog as of quarter-end was $16.86 billion, reflecting a meteoric year-over-year rise of 190%. As of Jul 31, 2021, Thor had cash and cash equivalents of $448.7 million, and long-term debt of $1,594.8 million. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CarMax Inc. KMX reported second-quarter fiscal 2022 (ended Aug 31, 2021) net earnings per share of $1.72, missing the Zacks Consensus Estimate of $1.95 amid lower-than-anticipated gross profit per unit from the company’s used and wholesale vehicles segment. The bottom line also declined from $1.79 per share recorded in the year-ago period. Revenues came in at $7,988.4 million, beating the Zacks Consensus Estimate of $7,098 million and recording a 48.7% year-over-year increase. CarMax bought back 1.8 million shares of common stock for $200 million during the fiscal second quarter. The firm had cash/cash equivalents and long-term debt of $58.1 million and $2,190 million, respectively, as of Aug 31, 2021.
Ford F announced its decision to extend $15.5 billion in revolving credit facility to encompass key metrics that are fundamental to the Ford+ growth plan and align with its approach of operating a safe, sustainable, and successful business. The innovative arrangement brings together extensions of three revolving credit lines that consist of a five-year $10.1-billion facility (maturing in September 2026), a three-year $3.4-billion facility (maturing in 2024) and another three-year $2.0-billion facility (maturing in September 2024). The renewal policies have been designed to be more inclusive to take into account Ford’s environmental, social and corporate governance initiatives, including the company’s stewardship in the electric vehicle revolution.
The Goodyear Tire & Rubber Company GT announced a multi-year collaboration with Gatik, aimed at advancing the development of mobility solutions for the autonomous business to business short-haul logistics industry. Per the agreement, Gatik's medium-duty fleet will utilize tires powered by Goodyear’s SightLine technology. The deal opens new unexplored avenues for the tire maker, enabling it to gain experience about the implications of autonomous technologies in the increasingly important middle-mile delivery and logistics. For Gatik, the use of Goodyear’s advanced tire intelligence solutions is anticipated to help reduce fuel and maintenance costs, while improving vehicle performance. The partnership seeks to combine the state-of-the-art technologies of both firms to help bring more operational efficiency in the middle-mile segment.
Toyota Motor’s TM subsidiary, Woven Planet Holdings, announced the acquisition of Renovo Motors in a bid to rev up its autonomous vehicle (AV) technology. The acquisition will enhance Woven Planet’s open vehicle development platform, Arene, which is scheduled for market introduction by 2025. Toyota expects Renovo to aid Arene function across multiple automakers’ platforms. Woven Planet has been committed to investing in automated driving to bring it to the market and this is the company’s third acquisition in less than a year. The financial terms and conditions of the deal have not yet been disclosed.
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
In the past six months, all stocks but General Motors and Harley Davidson have registered gains. In the past week, all stocks have slid, apart from General Motors, Ford and Tesla.
What’s Next in the Auto Space?
Industry watchers will track China vehicle sales data for September 2021, which is likely to be released by the China Association of Automobile Manufacturers later this week. Investors shall keep a tab on General Motors’ analyst day, to be held on Oct 6. Also, stay tuned for updates on how automakers will tackle the semiconductor shortage and make changes in business operations.
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Ford Motor Company (F): Free Stock Analysis Report
Toyota Motor Corporation (TM): Free Stock Analysis Report
Thor Industries, Inc. (THO): Free Stock Analysis Report
The Goodyear Tire & Rubber Company (GT): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
CarMax, Inc. (KMX): Free Stock Analysis Report
Asbury Automotive Group, Inc. (ABG): Free Stock Analysis Report
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