AXL Stock Fair Value – BofA Turnaround Sends American Axle & Manufacturing Sliding
November 29, 2023
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American Axle & Manufacturing ($NYSE:AXL) (AAM) is a leading global supplier of driveline and drivetrain systems, modules, and components for light trucks and cars. Headquartered in Detroit, Michigan, the company has manufacturing plants and technical centers in the United States, Mexico, Europe, South America, and Asia. AAM also provides aftermarket services for its driveline and drivetrain products. Recently, the stocks of American Axle & Manufacturing have taken a hit due to Bank of America (BofA) becoming bearish on the company. The bearishness of BofA towards American Axle & Manufacturing can be attributed to the recent fall in demand for automobiles due to the economic downturn. This has caused a decrease in sales of components manufactured by the company, resulting in a decline in its stock prices.
BofA has downgraded its stance on AAM from “outperform” to “underperform,” signaling to investors that there is an increased risk associated with investing in the company’s shares. Despite the current economic uncertainty, American Axle & Manufacturing continues to be a market leader in its field, with its products being used by major automakers around the world. The company has also been successful in diversifying its customer base over the years to reduce its dependence on one particular sector. It remains to be seen how AAM’s stocks will fare in the long run, but investors should be mindful of BofA’s bearish sentiment and reassess their investments accordingly.
Market Price
On Tuesday, American Axle & Manufacturing (AAM) saw a decline in its stock price after a surge in Bank of America (BofA). AAM opened the day at $6.8 and closed at $7.1, posting a decrease of 1.3% from its prior closing price of $7.2. This downward trend was in direct response to BofA’s positive momentum in the stock market, which made investors turn their attention away from AAM. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for AXL. More…
| Total Revenues | Net Income | Net Margin |
| 6.01k | -1.3 | 0.3% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for AXL. More…
| Operations | Investing | Financing |
| 491.7 | -172.3 | -177.6 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for AXL. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 5.47k | 4.86k | 5.24 |
Key Ratios Snapshot
Some of the financial key ratios for AXL are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 8.5% | 16.1% | 3.3% |
| FCF Margin | ROE | ROA |
| 4.9% | 19.9% | 2.3% |
Analysis – AXL Stock Fair Value
At GoodWhale, we recently conducted a fundamental analysis of AMERICAN AXLE & MANUFACTURING. Based on our proprietary Valuation Line, we determined that the intrinsic value of the stock is about $9.3. Currently, the stock is traded at $7.1, which is 23.9% below its intrinsic value. Therefore, we believe that AMERICAN AXLE & MANUFACTURING stock is undervalued and may represent an attractive investment opportunity. More…
Peers
It operates in four segments: Driveline, Metal Formed Products, Castings and Forgings, and Other. American Axle & Mfg Holdings Inc has several competitors, such as Rane Holdings Ltd, HGears AG, and UCAL Fuel Systems Ltd, all of which are engaged in similar areas of business.
– Rane Holdings Ltd ($BSE:505800)
Rane Holdings Ltd is a leading manufacturer and supplier of automotive components and systems, with a presence in the Indian, US, and European markets. The company has a market cap of 12.66B as of 2023, making it one of the largest players in the automotive industry. Its Return on Equity (ROE) is 10.29%, which indicates that the company is efficiently utilizing its equity to generate profits. The company has been able to maintain a steady growth rate over the years and is well poised to capitalize on the growing demand for automotive components.
– HGears AG ($BER:HGEA)
HGears AG is a global provider of high-quality gear drive components and systems for automotive, industrial, and agricultural applications. The company has a market cap of 83.2 million as of 2023, indicating that it is a relatively small and niche player in the industry. Its Return on Equity (ROE) of 2.74% indicates that the company is generating modest returns on its shareholders’ investments. HGears is committed to providing reliable, safe, and cost-effective solutions to its customers and has been able to maintain a steady growth rate over the years.
– UCAL Fuel Systems Ltd ($BSE:500464)
UCAL Fuel Systems Ltd is a leading manufacturer of automotive fuel systems, with a global presence across five continents. The company’s market cap is 2.77 billion as of 2023, reflecting its position as a major player in the automotive fuel systems industry. Additionally, UCAL Fuel Systems Ltd has achieved an impressive Return on Equity (ROE) of 7.9%, which is an indication of the firm’s strong performance and profitability. This high ROE shows that the company has been able to effectively utilize its equity base to generate high returns for its shareholders.
Summary
American Axle & Manufacturing (AAM) has recently seen a drop in its stock price as Bank of America downgraded its rating from “Buy” to “Neutral”. Investors should take caution when considering investing in AAM as there are several risks. AAM’s exposure to the United States automotive market, lower than expected sales, dilution of equity, and tightened credit ratings all present potential pitfalls for investors.
Analysts remain divided on their outlook for AAM, as the stock trades at a significant discount to its peers and the wider market. With domestic sales expected to remain weak in the near term, investors should assess the risks associated with investing in AAM before making any decisions.
