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The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Each stock is given an alphabetic rating of A, B, C, D or F based on their value, growth, and momentum qualities. With this system, an A is better than a B, a B is better than a C, and so on, meaning the better the score, the better chance the stock will outperform.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

Growth investors are more concerned with a stock's future prospects, and the overall financial health and strength of a company. Thus, the Growth Style Score analyzes characteristics like projected and historic earnings, sales, and cash flow to find stocks that will see sustainable growth over time.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

To have the best chance of big returns, you'll want to always consider stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B, which will give you the highest probability of success. If you're looking at stocks with a #3 (Hold) rank, it's important they have Scores of A or B as well to ensure as much upside potential as possible.

As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: American Axle & Manufacturing (AXL)

Detroit-based American Axle & Manufacturing Holdings, Inc. is a leading supplier of driveline and drivetrain systems, modules and components for the light vehicle market. It manufactures Driveline and Metal Forming technologies to support electric, hybrid and internal combustion vehicles. The company operates with around 80 facilities in 18 countries. American Axle’s major customers include General Motors, Stellantis and Ford.

AXL is a #3 (Hold) on the Zacks Rank, with a VGM Score of A.

Momentum investors should take note of this Auto-Tires-Trucks stock. AXL has a Momentum Style Score of B, and shares are up 9.3% over the past four weeks.

Three analysts revised their earnings estimate higher in the last 60 days for fiscal 2024, while the Zacks Consensus Estimate has increased $0.01 to $0.35 per share. AXL also boasts an average earnings surprise of 933.4%.

With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, AXL should be on investors' short list.

Zacks Investment Research

American Axle & Manufacturing Holdings AXL reported third-quarter 2024 adjusted earnings of 20 cents per share, which surpassed the Zacks Consensus Estimate of a cent. The company had incurred a loss of 11 cents per share in the year-ago quarter.

The company generated quarterly revenues of $1.50 billion, missing the Zacks Consensus Estimate of $1.51 billion. Revenues declined 3% on a year-over-year basis.

Stay up-to-date with the quarterly releases: See Zacks Earnings Calendar.

American Axle & Manufacturing Holdings, Inc. Price, Consensus and EPS Surprise

American Axle & Manufacturing Holdings, Inc. price-consensus-eps-surprise-chart | American Axle & Manufacturing Holdings, Inc. Quote

Segmental Performance

In the reported quarter, the Driveline segment recorded sales of $1.04 billion, down 1.7% year over year. The figure, however, surpassed our estimate of $1.03 billion. The segment registered adjusted EBITDA of $135.7 million, which fell 1.1% on a year-over-year basis and missed our estimate of $141.5 million.

The company’s Metal Forming business generated revenues of $596.5 million, which fell 4.5% from the year-ago quarter’s figure and missed our estimate of $604.5 million. The segment registered an adjusted EBITDA of $38.7 million, which rose 98.5% and outpaced our estimate of $21.3 million.

Financial Position

American Axle’s third-quarter SG&A expenses totaled $94.6 million, up from the year-ago quarter’s reported figure of $81.8 million.

Net cash provided by operating activities was $143.6 million, down from $178.3 million in the year-ago period.

Capital spending in the quarter was $72.9 million, up from $47.5 million reported in the year-ago period.

In the three months ended Sept. 30, 2024, the company posted an adjusted free cash flow of $74.6 million compared with $135.8 million recorded in the year-ago period.

As of Sept. 30, 2024, American Axle had cash and cash equivalents of $542.5 million, up from $519.9 million as of Dec. 31, 2023.

Its net long-term debt was $2.64 billion, down from $2.75 billion as of Dec. 31, 2023.

AXL Revises 2024 Outlook

American Axle now envisions full-year 2024 revenues in the band of $6.10-$6.15 billion compared with the prior estimated range of $6.10-$6.30 billion.

Adjusted EBITDA is estimated in the band of $715-$745 million compared with the previous projection of $705-$755 million.

Adjusted free cash flow is expected in the range of $200-$220 million compared with the previous estimate of $200-$240 million.

Zacks Rank & Key Picks

AXL currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, Tesla, Inc. TSLA and BYD Company Limited BYDDY, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 25 cents and 21 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.94%. EPS estimates for 2024 and 2025 have improved by 20 cents and 13 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for BYDDY’s 2024 sales and earnings suggests year-over-year growth of 23.61% and 31.51%, respectively. EPS estimates for 2024 and 2025 have improved by 23 cents and 26 cents, respectively, in the past seven days.

Zacks Investment Research

Have you looked into how American Axle & Manufacturing (AXL) performed internationally during the quarter ending September 2024? Considering the widespread global presence of this maker of auto parts, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.

In the current era of a tightly interconnected global economy, the proficiency of a company to penetrate international markets significantly influences its financial health and trajectory of growth. For investors, the key is to grasp how reliant a company is on overseas markets, as this provides insights into the durability of its earnings, its ability to exploit different economic cycles, and its overall growth capabilities.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

Our review of AXL's last quarterly performance uncovered some notable trends in the revenue contributions from its international markets, which are commonly analyzed and tracked by Wall Street experts.

The company's total revenue for the quarter amounted to $1.5 billion, marking a decrease of 3% from the year-ago quarter. We will next turn our attention to dissecting AXL's international revenue to get a clearer picture of how significant its operations are outside its main base.

Unveiling Trends in AXL's International Revenues

During the quarter, Europe contributed $218.7 million in revenue, making up 14.53% of the total revenue. When compared to the consensus estimate of $197.9 million, this meant a surprise of +10.51%. Looking back, Europe contributed $233.6 million, or 14.31%, in the previous quarter, and $233.1 million, or 15.02%, in the same quarter of the previous year.

Of the total revenue, $155.4 million came from Asia during the last fiscal quarter, accounting for 10.33%. This represented a surprise of +8.5% as analysts had expected the region to contribute $143.23 million to the total revenue. In comparison, the region contributed $149.1 million, or 9.13%, and $146.8 million, or 9.46%, to total revenue in the previous and year-ago quarters, respectively.

South America accounted for 3.04% of the company's total revenue during the quarter, translating to $45.8 million. Revenues from this region represented a surprise of -0.22%, with Wall Street analysts collectively expecting $45.9 million. When compared to the preceding quarter and the same quarter in the previous year, South America contributed $42.7 million (2.62%) and $50 million (3.22%) to the total revenue, respectively.

Prospective Revenues in International Markets

Wall Street analysts expect American Axle to report a total revenue of $1.45 billion in the current fiscal quarter, which suggests a decline of 0.9% from the prior-year quarter. Revenue shares from Europe, Asia and South America are predicted to be 13.2%, 9.9% and 2.3%, corresponding to amounts of $190.81 million, $143.46 million and $33.39 million, respectively.

For the entire year, the company's total revenue is forecasted to be $6.21 billion, which is an improvement of 2.1% from the previous year. The revenue contributions from different regions are expected as follows: Europe will contribute 14% ($868.11 million), Asia 9.5% ($586.49 million) and South America 2.6% ($158.49 million) to the total revenue.

Key Takeaways

Relying on international markets for revenues, American Axle faces both prospects and perils. Thus, tracking the company's international revenue trends is essential for accurately projecting its future trajectory.

In an era of growing international interdependencies and escalating geopolitical disputes, Wall Street analysts are vigilant in tracking these trends for businesses with a global reach, in order to refine their predictions of earnings. It should be noted, however, that a multitude of other elements, such as a company's domestic position, also play a significant role in shaping the earnings forecasts.

Here at Zacks, we put a great deal of emphasis on a company's changing earnings outlook, as empirical research has shown that's a powerful force driving a stock's near-term price performance. Quite naturally, the correlation is positive here -- an upward revision in earnings estimates drives the stock price higher.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

At present, American Axle holds a Zacks Rank #3 (Hold). This ranking implies that its near-term performance might mirror the overall market movement. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here

Assessing American Axle's Stock Price Movement in Recent Times

The stock has increased by 10.4% over the past month compared to the 4.4% rise of the Zacks S&P 500 composite. Meanwhile, the Zacks Auto-Tires-Trucks sector, which includes American Axle, has increased 16% during this time frame. Over the past three months, the company's shares have experienced a gain of 6.6% relative to the S&P 500's 13.1% increase. Throughout this period, the sector overall has witnessed a 27.4% increase.

Zacks Investment Research

American Axle & Manufacturing (AXL) came out with quarterly earnings of $0.20 per share, beating the Zacks Consensus Estimate of $0.01 per share. This compares to loss of $0.11 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 1,900%. A quarter ago, it was expected that this maker of auto parts would post earnings of $0.10 per share when it actually produced earnings of $0.19, delivering a surprise of 90%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

American Axle, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $1.5 billion for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.52%. This compares to year-ago revenues of $1.55 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

American Axle shares have lost about 29.4% since the beginning of the year versus the S&P 500's gain of 25.2%.

What's Next for American Axle?

While American Axle has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for American Axle: favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.01 on $1.45 billion in revenues for the coming quarter and $0.35 on $6.21 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Automotive - Original Equipment is currently in the bottom 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Innoviz Technologies Ltd. (INVZ), has yet to report results for the quarter ended September 2024. The results are expected to be released on November 13.

This company is expected to post quarterly loss of $0.14 per share in its upcoming report, which represents a year-over-year change of +22.2%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Innoviz Technologies Ltd.'s revenues are expected to be $5.03 million, up 44.6% from the year-ago quarter.

Zacks Investment Research