Exclusive Analysis for the Discerning Investor
Used-car giant CarMax reported weak results Thursday morning. Oddly, we think this bodes well for new car sales at the automakers. Consumers are flocking toward new cars with used-car prices so high.
May retail sales were down 0.2% from April, but up 5% from May 2011. We think investors should remain focused on the big picture.
Best Ideas Portfolio holding Ford plans to sell $1.5 billion in debt for the first time since it received an investment-grade rating from Moody’s on May 22. We continue to like the automaker’s upward trajectory in fundamentals.
Our take on AutoNation’s strong sales and Ford’s possible indigenous branding in China.
General Motors may have an improved balance sheet and a tremendous opportunity in China, but we still feel Ford is the better risk-adjusted way to play the recovery in global automotive demand.
Best-idea Ford hit the ball out of the park with its North American performance, but weakness in Europe and Asia weighed on results. We’re sticking with our fair value estimate.
Preliminary monthly data showed that March auto sales in the US increased 12.7% and that Ford’s (F) performance was its best showing for the month in five years. The industry-wide seasonally-adjusted rate came in at a whopping 14.4 million vehicles. Although Ford’s growth rate trailed other car manufacturers, many peers were lapping easy comparisons due to last year’s production setbacks, and we’re not reading too much into it. We continue to believe Ford is a core position in the portfolio of our Best Ideas Newsletter. Though the increase in Ford’s sales was lower than peers’ during the month, we can’t find too much fault in the company’s monthly performance and are excited about what the numbers may mean with respect to profitability. As … Read more
AutoZone (AZO) reported strong fiscal second-quarter 2012 results Tuesday that showed solid same-store-sales increases and bottom-line expansion. We’ll be tuning in to the firm’s conference call, but we don’t expect to make a change to our fair value estimate for the auto-parts retailer at this time. AutoZone’s fourth-quarter revenue advanced 8.6% during the period thanks to nearly a 6% increase in same-store-sales. Gross margin increased 40 basis points, to 51.3%, in the quarter, but such improved profitability was more than offset by higher self-insurance costs. The company’s net income jumped nearly 13% in the quarter, while diluted earnings per share of $4.15 increased over 24% from the same period a year ago thanks to share buybacks. Consensus was at $4.04 … Read more
To view our fundamental and long-term thesis on the automaker, please peruse the research and analysis found in the ‘Related Articles’ section below.
Ford (F) posted fourth-quarter results that showed excellent top-line performance but weak underlying profitability that disappointed most investors. We continue to believe that Ford has substantial valuation upside and believe the firm to be a long-term holding in the portfolio of our Best Ideas Newsletter. We’re not playing the “quarterly earnings game” with the automaker’s shares and may add to our position in our Best Ideas Newsletter upon significant market weakness. Total revenue of $34.6 billion in the fourth quarter came in better than consensus expectations and represented a 2.1% increase from the same period a year ago. Fourth-quarter pre-tax operating profit came in at $1.1 billion, or $0.20 per share, down from $0.30 in last year’s quarter and below … Read more