Last week, many auto biggies released U.S. vehicle sales data for the month of January 2022. U.S. auto giant Ford F sold 143,531 vehicles last month, almost on par with January 2021 levels. Meanwhile, Japan-based auto biggies that report monthly sales data witnessed a year-over-year decline. Per LMC Automotive, U.S. new-vehicle sales for January contracted 9% year over year to around 1 million, as the shortage of semiconductor supply continued to upend inventories. Retail inventory remained below 1 million units for the eighth consecutive month in January.
Meanwhile, fourth-quarter 2021 results of U.S. auto giants General Motors GM and Ford grabbed headlines. While GM delivered a comprehensive beat, F fell short of earnings estimates. Both General Motors and Ford carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Leading engine maker Cummins CMI put up a dismal Q4 show, missing both top- and bottom-line estimates. Auto equipment suppliers Adient plc ADNT and Meritor, Inc. MTOR also released quarterly results. While Adient incurred loss, Meritor topped earnings expectations.
Highlights of the Quarterly Releases
General Motors reported fourth-quarter 2021 adjusted earnings of $1.35 per share, topping the Zacks Consensus Estimate of $1.15. Better-than-expected profits from its North America and Financial segments drove this outperformance. The bottom line, however, declined from the year-ago quarter’s $1.93 per share. Revenues of $33,584 million surpassed the Zacks Consensus Estimate of $29,221 million but dropped from the year-ago figure of $37,518 million.
General Motors had cash and cash equivalents of $20,067 million as of Dec 31, 2021. Long-term automotive debt at quarter-end was $16.4 billion. GM expects 2022 net income in the range of $9.4-$10.8 billion and adjusted EBIT within $13.0-$15.0 billion. (General Motors Q4 Earnings and Sales Top Estimates, Down Y/Y)
Ford reported adjusted earnings of 26 cents per share for fourth-quarter 2021, missing the Zacks Consensus Estimate of 43 cents. Lower-than-expected contribution in North America and a pretax loss in Europe resulted in this underperformance. The bottom line, moreover, compares unfavorably with the year-ago earnings of 34 cents. Nonetheless, the company’s consolidated fourth-quarter revenues came in at $37.7 billion, up 4.7% year over year.
Ford had cash and cash equivalents of $20,540 million as of Dec 31, 2021. Automotive long-term debt decreased to $17,200 million on Dec 31, 2021. F anticipates adjusted EBIT for 2022 between $11.5 billion and $12.5 billion. Full-year vehicle wholesale volumes are anticipated to jump 10% to 15%. Adjusted FCF is envisioned in the range of $5.5-6.5 billion for 2022. (Ford Q4 Earnings Miss Estimates, Dividend Reinstated)
Cummins reported fourth-quarter 2021 earnings of $2.85 per share, declining from $3.36 recorded in the year-ago period and lagging the Zacks Consensus Estimate of $3.08. Weaker-than-expected contribution across all but the Distribution segment resulted in the underperformance. Cummins’ revenues totaled $5,850 million, slightly up from $5,830 million recorded in the fourth quarter of 2020. The top line, however, fell short of the Zacks Consensus Estimate of $5,783 million.
Cummins’ cash and cash equivalents were $2,592 million as of Dec 31, 2021, down from $3,401 million in the comparable period of 2020. Long-term debt totaled $3,579 million, down from $3,610 million on Dec 31, 2020. CMI expects 2022 revenues to grow 6% year over year. EBITDA is envisioned at 15.5% of sales. (Cummins' Q4 Earnings Miss Estimates, Decline 15% Y/Y)
Meritor posted adjusted earnings per share of 80 cents for first-quarter fiscal 2022, increasing 33.3% from 60 cents in the year-ago quarter. The metric also beat the Zacks Consensus Estimate of 75 cents on higher-than-expected revenues from the Commercial Truck & Trailer segment. Sales grew 11% year over year to $984 million for the fiscal first quarter. The top line, however, missed the Zacks Consensus Estimate of $1,002 million.
Meritor’s cash and cash equivalents summed $113 million as of Dec 31, 2021. Long-term debt was $1,027 million at quarter-end. For fiscal 2022, MTOR envisions sales in the range of $4.1-$4.3 billion. Cash flow from operations is anticipated in the range of $275-$320 million and free cash flow is projected in the band of $175-$200 million. (Meritor's Q1 Earnings Beat, Sales Miss, Increase Y/Y)
Adient incurred an adjusted loss per share of 38 cents in the first quarter of fiscal 2022. The Zacks Consensus Estimate was pegged at earnings of 8 cents. The bottom line also compared unfavorably with the year-ago earnings of $1.71 per share. This downside stemmed from declining profitability across all the segments. Adient generated net sales of $3,480 million, down from $3,848 million recorded in the prior-year period. The top line, however, surpassed the Zacks Consensus Estimate of $3,381.5 million.
Adient had cash and cash equivalents of $2,080 million as of Dec 31, 2021. Long-term debt amounted to $3,482 million. ADNT expects 2022 revenues to be $14.8 billion. Capital expenditure is envisioned in the range of $300-$325 million. Equity income expectation has been increased to $90 million from $80-$90 million mentioned earlier. (Adient Incurs Q1 Loss, Surpasses Sales Estimates)
Price Performance
The following table shows the price movement of some of the major auto players over the past week and six-month period.
Zacks Investment Research
Image Source: Zacks Investment Research
What’s Next in the Auto Space?
Industry watchers will track China vehicle sales data for January 2022, which is likely to be released by the China Association of Automobile Manufacturers this week. Also, stay tuned for quarterly results of a host of auto companies, including Japan’s Big 3, that are slated to report this week.
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