General Motors disclosures should remind investors that GM has an interesting SOTP angle. While the 10K dropped language related to timing of Cruise Commercialization (we still expect this w/in the next 12-months), the company is clearly preparing for bigger things. Cruise employees and management are receiving Stock Options and RSUs that vest upon an IPO. On the negative side, GM also continues to disclose potential residual risks related to the bankruptcy of old GM (Plaintiffs want 30 MM additional shares for the GUC trust; GM will fight this at a March 11 hearing); The Takata recall could cost $1.2 bn (though GM is still seeking to avoid a recall).
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Wednesday (02/06/19), after the market closed, ORLY reported Q4 results. SSS of 3.3% missed consensus of 3.8% and Wolfe 4.0%. EPS of $3.72 missed consensus of $3.75 and our $3.79. Q1 and FY comp guidance of 3-5% was strong vs. Cons. 3.3% and our 3.5%.
Today (2/6/2019), after the market closed, ORLY reported Q4 results. SSS of 3.3% were below consensus of 3.8% and Wolfe 4.0%; however operating margins came in stronger +40bps versus Cons offset by tax rate. EPS of $3.72 missed consensus of $3.75 and our $3.79.
Once a quarter, we comb through corporate filings and summarize the most noteworthy datapoints. At a high level, developments during the quarter reinforced our view that investors should be Underweight Autos and Auto Parts, Underweight Dealers, and Overweight a relatively small selection of companies that fall into the Auto 2.0 category. In our view the U.S. Auto Cycle is in its 8th or 9th inning, with looming pressures on vehicle affordability. China is experiencing its first real Auto Industry downturn, and we are not convinced that the Central Government will step in to specifically prop up Autos. Europe also faces a number of challenges: These include potential trade risks (7% of Europe produced vehicles are exported to the U.S.), political risks (Brexit), and regulatory risks (vehicles more expensive to produce, at the same time that pricing has become more challenged).
Wednesday (10/25/18), after the market closed, ORLY reported Q3 results. SSS of 3.9% were in-line with consensus of 3.8% and Wolfe 4.0%. EPS of $4.50 beat consensus of $4.31 and our $4.39. Q4 comp guidance of 2-4% was a little light vs. Cons. 3.6% and our 4.5%, but mgmt. pointed to difficult compares and a calendar shift for their conservatism.
Wednesday, after the market closed, ORLY reported Q2 results. SSS of 4.6% were above consensus of 3.2% and Wolfe 2.5% but right around the 4.0 to 4.5% buy-side whisper. EPS of $4.28 beat consensus of $4.06 and our $4.07. Full-year margin guidance was maintained but EPS guide increased to $15.70 - $15.80 (was $15.30 - $15.40).
Today (7/25/2018), after the market closed, ORLY reported Q2 results. SSS of 4.6% were above consensus of 3.2% and Wolfe 2.5% but right around the 4.0 to 4.5% buy side whisper. EPS of $4.28 beat consensus of $4.06 and our $4.07. ORLY guided to a Q3 18 comp of 2-4% (though tempered forward expectations by highlighting a tough setup from an extra Sunday and rising gas prices). It maintained its full-year comp guide at 2-4%. 2% would lock-in a 3% for the year, so we’re surprised they didn’t narrow the range. Full-year margin guidance was maintained but EPS guidance increased $15.70 to $15.80 (was $15.30-$15.40).
Add tariffs and commodity inflation to the growing list of headaches that investors/companies must contend with. We lay out our thoughts and some exhibits to help frame the impact of these macro issues on the auto part retailers and what we have observed to date.
We undertook the unenviable task of reading the proxy for every company under coverage (and one we don’t cover: TSLA).
Using Return on Invested Capital as a lens, we take a look at which companies and sub-industries capture the highest returns within the automotive value chain. We calculate ROIC across 27 companies within industries including dealers, OEMs, parts suppliers, aftermarket retailers, and service providers.
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