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American Axle & Manufacturing (AXL)
NYSE:AXL
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American Axle
(NYSE:AXL)62Neutral
Positive Factors
Financial Performance
AXL posted adjusted FCF of $79.2mm in 4Q:24, which was up YoY from $4.5mm in 4Q:23.
Mergers and Acquisitions
Post acquisition, AXL would become the 6th largest supplier in North America by sales and one of the top 25 globally.
Negative Factors
Industry Challenges
Uncertainty in the European auto industry and limited upside potential on mix in NA (trucks) create risk.
American Axle (AXL) vs. S&P 500 (SPY)
Market Cap
$583.20M
Dividend YieldN/A
Average Volume (3M)2.66M
Price to Earnings (P/E)16.5
Beta (1Y)1.65
Revenue Growth0.75%
EPS GrowthN/A
CountryUS
Employees19,000
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)0.29
Shares Outstanding117,581,030
10 Day Avg. Volume2,908,878
30 Day Avg. Volume2,655,172
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.10
Price to Cash Flow (P/CF)1.00
P/FCF Ratio0.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$6.50Price Target Upside42.86% Upside
Rating ConsensusHold
Number of Analyst Covering5
American Axle Business Overview & Revenue Model
Company DescriptionAmerican Axle & Manufacturing Holdings, Inc. (AAM) is a leading global supplier of driveline and drivetrain systems, as well as related components for the automotive industry. The company operates in the automotive sector, primarily focusing on manufacturing axles, driveshafts, and transmission parts that are essential for vehicle powertrain systems. AAM serves a diverse range of customers, including major automotive manufacturers and suppliers worldwide.
How the Company Makes MoneyAmerican Axle & Manufacturing generates revenue primarily through the design, engineering, validation, and manufacturing of driveline and metal forming products. Its key revenue streams include sales of axles, driveshafts, and other related components to original equipment manufacturers (OEMs) and tier-one automotive suppliers. The company also engages in aftermarket sales and services. Strategic partnerships with major automotive companies, such as General Motors and Ford, significantly contribute to its earnings by securing long-term supply contracts. Additionally, AAM invests in research and development to innovate and improve its product offerings, enhancing its competitive position in the automotive market.
American Axle Financial Statement Overview
Summary
American Axle shows moderate financial health with steady revenue growth but faces challenges in profit margins and high leverage. While cash flow generation is strong, the volatility in free cash flow and high debt levels are concerns.Income Statement
American Axle showed a steady increase in revenue over recent years, with a Revenue Growth Rate of 0.75% from 2023 to 2024. The Gross Profit Margin for 2024 stands at 12.11%, which is a slight improvement over previous years. However, the Net Profit Margin of 0.57% is relatively low, indicating challenges in converting revenue into profit. The EBIT and EBITDA margins for 2024 remain modest at 3.94% and 3.94%, respectively, suggesting operational efficiencies could be improved.70
Positive
Balance Sheet
The company's Debt-to-Equity ratio in 2023 was 4.94, indicating high leverage, which could pose financial risks if not managed carefully. The Return on Equity (ROE) was negative in 2023 due to negative net income, highlighting challenges in generating returns for shareholders. The Equity Ratio was around 11.29%, suggesting limited equity buffer against liabilities.60
Neutral
Cash Flow
Free Cash Flow has been volatile, with a decline in recent years, reflecting a Free Cash Flow Growth Rate of -27.38% from 2022 to 2023. The Operating Cash Flow to Net Income Ratio was strong in 2023, indicating good cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio was negative, pointing to potential issues in maintaining cash reserves.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 6.12B | 6.08B | 5.80B | 5.16B | 4.71B | Gross Profit |
| 741.40M | 624.30M | 704.90M | 722.70M | 582.70M | EBIT |
| 241.40M | 146.60M | 243.90M | 240.60M | 188.10M | EBITDA |
| 241.40M | 664.40M | 732.90M | 839.20M | 109.70M | Net Income Common Stockholders |
| 35.00M | -33.60M | 64.30M | 5.90M | -561.10M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 552.90M | 519.90M | 511.50M | 530.20M | 557.00M | Total Assets |
| 5.06B | 5.36B | 5.47B | 5.64B | 5.92B | Total Debt |
| 2.74B | 2.98B | 3.03B | 3.23B | 3.57B | Net Debt |
| 2.18B | 2.46B | 2.52B | 2.70B | 3.02B | Total Liabilities |
| 4.50B | 4.75B | 4.84B | 5.18B | 5.54B | Stockholders Equity |
| 562.80M | 604.90M | 627.30M | 457.80M | 370.50M |
| Cash Flow | Free Cash Flow | |||
| 204.30M | 201.50M | 277.50M | 357.20M | 239.00M | Operating Cash Flow |
| 455.40M | 396.10M | 448.90M | 538.40M | 454.70M | Investing Cash Flow |
| -254.80M | -184.50M | -243.00M | -161.10M | -218.40M | Financing Cash Flow |
| -156.20M | -205.50M | -217.20M | -401.40M | -214.50M |
American Axle Technical Analysis
Negative
4.55
Price Trends
5.50
Negative
5.92
Negative
6.34
Negative
Market Momentum
-0.17
Positive
33.13
Neutral
4.32
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AXL, the sentiment is Negative. The current price of 4.55 is below the 20-day moving average (MA) of 5.16, below the 50-day MA of 5.50, and below the 200-day MA of 6.34, indicating a bearish trend. The MACD of -0.17 indicates Positive momentum. The RSI at 33.13 is Neutral, neither overbought nor oversold. The STOCH value of 4.32 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AXL.
American Axle Risk Analysis
American Axle disclosed 28 risk factors in its most recent earnings report. American Axle reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
American Axle Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $469.14M | 2.90 | 11.02% | 9.46% | -11.02% | -51.66% | |
71 Outperform | $5.04B | 10.48 | 17.69% | 3.37% | -0.70% | -7.27% | |
71 Outperform | C$13.93B | 10.26 | 8.77% | 5.42% | 2.72% | 5.00% | |
64 Neutral | $2.16B | ― | -4.28% | 2.82% | -2.57% | -248.28% | |
62 Neutral | $583.20M | 16.52 | 6.22% | ― | 0.75% | ― | |
62 Neutral | $6.15B | 18.70 | 6.11% | 1.53% | -11.10% | -46.32% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
AXL
American Axle
4.55
-2.11
-31.68%
BWA
BorgWarner
28.12
-3.40
-10.79%
DAN
Dana Holding
13.78
1.81
15.12%
LEA
Lear
89.27
-47.01
-34.50%
TEN
Tsakos Energy Navigation
16.29
-5.68
-25.85%
TSE:MG
Magna International
49.45
-20.60
-29.41%
American Axle Earnings Call Summary
Earnings Call Date: Feb 14, 2025 | % Change Since: -4.21% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mixed sentiment. While AAM demonstrated strong cash flow, financial performance, and strategic business expansion, it faced challenges such as a decline in revenue and market uncertainties affecting backlog and bidding dynamics. The positive aspects of growth and financial stability were balanced by operational challenges and revenue declines.Highlights
Strong Cash Flow and Financial Performance
AAM generated adjusted free cash flow of $79 million in the fourth quarter and $230 million for the full year 2024, exceeding the midpoint of their adjusted free cash flow target. The company improved its adjusted EBITDA margin by 80 basis points year-over-year.
Secured Contracts and Business Expansion
AAM secured a contract extension to supply power transfer units for Ford Maverick and Bronco Sport vehicles. Additionally, AAM announced a transformational combination with Dowlais to create a leading global driveline and metal-forming supplier.
Debt Reduction and Strong Liquidity
AAM ended the year with a net debt of $2.1 billion and reduced its net leverage ratio to 2.8 times from 3.3 times a year ago. The company maintained a total available liquidity of approximately $1.5 billion.
Lowlights
Revenue Decline
AAM's fourth quarter 2024 sales were $1.38 billion compared to $1.46 billion in the fourth quarter of 2023, primarily due to a decline in North American production by approximately 3%.
Adjusted EPS Loss
Adjusted earnings per share for the fourth quarter of 2024 was a loss of $0.06 compared to a loss of $0.09 per share in the fourth quarter of 2023, though it turned positive for the full year.
Challenges in Market Dynamics
The automotive market experienced an 'air pocket' in sourcing due to OEMs reevaluating their product portfolios, affecting the backlog and bidding dynamics.
Company Guidance
During the American Axle & Manufacturing (AAM) fourth quarter 2024 earnings call, the company provided comprehensive guidance for 2025. AAM anticipates sales ranging from $5.8 billion to $6.05 billion, with an adjusted EBITDA between $700 million and $760 million. The company projects adjusted free cash flow to be approximately $200 million to $230 million. AAM's 2025 outlook is based on an expected North American production of around 15.1 million units. Despite a challenging environment, AAM remains focused on operational efficiency and continues to optimize its spending, including a $20 million reduction in R&D expenses. The company also highlighted its strategic combination with Dowlais, which is expected to create a leading global driveline and metal-forming supplier, targeting significant revenue synergies and cost efficiencies, with a projected $300 million in run-rate synergies post-combination.American Axle Corporate Events
Private Placements and FinancingM&A Transactions
American Axle Secures Financing for Dowlais Acquisition
Positive
Feb 24, 2025
On February 24, 2025, American Axle & Manufacturing Holdings, Inc. announced a significant amendment to its credit agreement, increasing its revolving credit facility to $1.495 billion and securing an $843 million incremental term loan B facility. This financial restructuring supports AAM’s acquisition of Dowlais Group plc, enhancing the company’s liquidity and capital structure. The successful syndication of bridge financing, including a $843 million Term Loan B and $500 million 2nd Lien Senior Secured Bridge Facility, underscores strong banking support for this transformative business combination. The acquisition is expected to expand AAM’s geographic reach and improve its market position, with anticipated cost synergies and increased revenue visibility.
M&A TransactionsBusiness Operations and StrategyFinancial Disclosures
American Axle Reports Solid 2024 Financial Results
Neutral
Feb 14, 2025
American Axle & Manufacturing Holdings, Inc. (AAM) reported its financial results for the fourth quarter and full year 2024, showing a solid growth in Adjusted EBITDA driven largely by operational performance. The company experienced a net loss in the fourth quarter, but achieved a net income for the full year 2024, reflecting a shift from a previous net loss in 2023. AAM’s sales decreased in the fourth quarter compared to 2023, impacted by volume and mix, but sales for the full year 2024 increased slightly. Looking ahead to 2025, AAM aims to optimize its core business and complete its announced combination with the Dowlais Group, projecting sales between $5.8 to $6.05 billion and an Adjusted EBITDA of $700 to $760 million.
M&A Transactions
American Axle Announces Major Merger with Dowlais Group
Positive
Jan 29, 2025
On January 29, 2025, American Axle & Manufacturing Holdings, Inc. announced its intention to acquire Dowlais Group plc, with the boards of both companies unanimously approving the merger. The deal, valued at approximately £1.16 billion, involves a cash and share offer for Dowlais shareholders, positioning the combined entity as a major global manufacturer in the automotive sector. The merger is expected to generate substantial cost synergies of $300 million and strengthen the company’s market standing with a diversified customer base and enhanced geographical presence. The business combination, which will be headquartered in Detroit, Michigan, is anticipated to conclude by the end of 2025, pending regulatory approvals and shareholder agreements.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.