Auto sales in the US are predicted to rise as a result of improved inventories, pent-up demand, consumer confidence, and technological advancements. Given the industry’s growth prospects, fundamentally strong auto stocks Oshkosh Corporation (OSK), Rolls-Royce Holdings plc (RYCEY) and BYD Company Limited (BYDDY) might be worth buying.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the auto industry.
In January, the number of new vehicles sold in the United States was 1,086,813 units, up 2.6% year-over-year. This increase in the sales of new vehicles reflects a favorable trend in the automotive industry, reflecting increased customer confidence and demand.
According to Business Research Insights, the global automotive market will increase at a CAGR of 3% to $3.58 trillion by 2031. The shift toward electric and driverless vehicles is expected to propel the automobile sector forward in the next few years.
The automobile industry is poised for significant expansion, owing mostly to the global transition toward electric vehicles. This trend is further fueled by favorable government regulations, automaker commitments to EVs, and increased concerns about climate change.
Considering these conducive trends, let’s look at the fundamentals of the three Auto & Vehicle Manufacturers stocks, starting with number three.
Stock #3: Oshkosh Corporation (OSK)
OSK designs, manufactures, and markets specialty trucks and access equipment vehicles worldwide. It operates through four segments: Access Equipment; Defense; Fire & Emergency; and Commercial.
OSK’s trailing-12-month ROTC of 12.29% is 76.9% higher than the industry average of 6.95%. Its 6.55% trailing-12-month ROTA is 33.7% higher than the 4.90% industry average.
OSK’s net sales for the fiscal fourth quarter that ended December 31, 2023, increased 11.9% year-over-year to $2.47 billion. Its gross income rose 44.3% from the prior-year period to $454.40 million. Also, the company’s adjusted net income and adjusted EPS increased 57.7% and 57.1% from their year-ago values to $169.40 million and $2.56, respectively.
Analysts expect OSK’s revenue to increase 6.8% year-over-year to $10.31 billion for the quarter ending December 2024. Its EPS is expected grow 3.5% year-over-year to $10.33 for the same period. Its EPS surpassed in all four trailing quarters. The stock has gained 45% over past nine months to close the last trading session at $113.43.
OSK’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
OSK has a B grade for Value. Within the Auto & Vehicle Manufacturers industry, it is ranked #17 out of 51 stocks. To see additional POWR Ratings for Growth, Momentum, Stability, Sentiment and Quality for OSK, click here.
Stock #2: Rolls-Royce Holdings plc (RYCEY)
Headquartered in London, the United Kingdom, RYCEY operates as an industrial technology company in the United Kingdom and internationally. The company operates in four segments: Civil Aerospace; Defence; Power Systems; and New Markets.
RYCEY’s trailing-12-month levered FCF margin of 12.95% is 105.4% higher than the 6.30% industry average. Its trailing-12-month ROTC of 61.08% is 778.9% higher than the 6.95% industry average.
During the six-month period, which ended on June 30, 2023, RYCEY’s revenue rose 34.3% from the year-ago value to £7.52 billion ($9.54 billion). Its gross profit increased 56% year-over-year to £1.66 billion ($2.10 billion).
The company’s profit for the period and EPS came in at £1.23 billion ($1.56 billion) and 14.70p compared to a loss and loss per share of £1.55 billion ($1.94 billion) and 19.29p in the prior-year period, respectively.
The consensus revenue came in at $20.26 billion for the fiscal year ending December 2024 represents a 8% increase year-over-year. Its EPS is expected to grow 30.9% year-over-year to $0.15 for the same year. RYCEY’s shares have gained 197.7% past year to close the last trading session at $3.87.
It’s no surprise that RYCEY has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Value, Momentum and Stability. It is ranked #15 in the same industry.
Beyond what is stated above, we’ve also rated RYCEY for Sentiment and Quality. Get all RYCEY ratings here.
Stock #1: BYD Company Limited (BYDDY)
Based in Shenzhen, China, BYDDY develops, manufactures, and sells automobiles and related products worldwide. It operates through three segments: Rechargeable Battery and Photovoltaic Products; Mobile Handset Components and Assembly Service; and Automobiles and Related Products.
BYDDY’s trailing-12-month ROCE of 24.68% is 113.4% higher than the industry average of 11.57%. Its 23.18% trailing-12-month CAPEX / Sales is 652.3% higher than the 3.08% industry average.
For the nine months ended September 30, BYDDY’s total operating revenue rose 57.8% year-over-year to RMB422.27 billion ($59.32 billion). Its other income grew 145% from the prior-year period to RMB2.82 billion ($396.16 million). Also, its total profit amounted to RMB26.07 billion ($3.66 billion), up 115.1% from the prior-year period.
Street expects BYDDY’s revenue to increase 27.4% year-over-year to $110.02 billion for the year ending December 2024. Its EPS is expected grow 15.3% year-over-year to $3.35 for the same period. Shares of BYDDY have gained 17.7% over past month to close the last trading session at $44.21.
BYDDY has an overall B rating, equating to a Buy in our POWR Ratings system.
BYDDY’s is ranked #12 in the same industry. It has a B grade for Growth, Value, Sentiment and Quality. To see additional BYDDY’s ratings for Stability and Momentum, click here.
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BYDDY shares were trading at $43.83 per share on Monday afternoon, down $0.38 (-0.86%). Year-to-date, BYDDY has declined -20.70%, versus a 3.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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