Major automotive companies recently posted their sales results for the month of June. SUV and pickup truck demand still remained strong but passenger cars continued their decline.
U.S auto sales are slowing amid a decelerating economy as people don’t seem as eager to go out and spend money on a vehicle. High interest rates on top of the competition from off-lease vehicles have pushed people away from investing in new cars. Slower than expected job growth also factors into the equation with fewer than expected people having disposable income.
While car makers are experiencing a slowing market at the moment, the door is still open for a Fed rate cut that can bring eager consumers flocking to dealerships. Pickup truck sales have remained strong, providing a boost for companies who dominate the market share for those vehicles. Let’s take a further look into automotive stocks that can jump out as winners later this year.
Ford’s F F-Series pickup trucks have held the majority of the market share for pickup trucks, though Fiat Chrysler FCAU recently jumped up right behind to second place with its Ram pickup. Ford Motor is currently sitting at a Zacks Rank #3 (Hold), and has had a standout year thus far. The automotive manufacturer is currently up 34.3% year-to-date and is looking to ride this wave into the second half of 2019.
The company was able to blow by our previous earnings estimate of $0.26 by $0.18 for an EPS surprise of 69.23%. Our year-over-year consensus estimates are projecting a 13.79% earnings spike to go along with a 2.13% revenue increase for the next quarter. Ford was also able to increase its earnings by 46.67% despite its revenue falling 3.47% from the previously reported quarter. This sales decline can be remedied by a July rate cut, which could propel the company into another solid quarter.
PACCAR PCAR is a global technology company that designs and manufactures commercial vehicles sold worldwide under the Kenworth, Peterbilt and DAF nameplates. PACCAR is another automotive stock that has been able to see some successful returns this year, as it is currently up 24.4% on the year. The automotive company is currently listed at a Zacks Rank #2 (Buy) and is showing solid potential. Zacks Consensus Estimates are currently forecasting a 13.84% jump in earnings with a 12.60% hike in total sales for the current quarter. The company has been able to consecutively surpass our estimates the past four quarters for an average EPS surprise of 7.17%. PACCAR’s valuation also makes it an appealing stock as it is currently trading 10X its forward earnings, which is below the industry average.
Tesla TSLA has recently made headlines: the electric car company was able to deliver 95,200 cars in the second quarter. This delivery surge is a 51.1% increase from its first quarter delivery numbers. Tesla CEO Elon Musk was under scrutiny the previous quarter for only delivering 63,000 vehicles while analysts were expecting 76,000. The second quarter delivery spike was able to shatter the company’s previous best of 90,700 set in the fourth quarter of 2018.
Tesla has had a tremendous 4 weeks, with shares climbing 21.4%. Our Zacks Consensus Estimates are currently calling for a 12.78% increase in earnings for the current year. In addition, Consensus Estimates are also predicting revenue to hit $25.57 billion compared to the previous year’s $21.46 billion. Looking even further ahead, estimates are anticipating earnings to soar a whopping 620%, with total revenue going up by 22.86% for 2020. Tesla is an innovative car company that has the potential to pioneer the future landscape of the automobile industry.
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