American Axle Falls 11% After Q3 Results Come Up Short

Shares of American Axle AXL are getting hit hard on Friday after the company released its third-quarter earnings results. In late afternoon trade, the stock had lost nearly 11 percent and was trading at $10.39. Cyclical gyrations in the automotive industry have caused AXL to underperform the broader market in 2012, but the stock is still positive on the year. Year-to-date, the shares have risen a little less than five percent, which compares to a gain of over 12 percent for the S&P 500. American Axle was devastated by the financial crisis as many of the company's customers either went bankrupt or narrowly avoided that fate. The stock traded as low as $0.40 in March 2009. Obviously, investors who bought in at the bottom in AXL have done unbelievably well, but shares remain well below pre-crisis levels. Over the last 5 years, the stock has fallen more than 56 percent and American Axle is currently a small-cap company with a market cap of only $775 million. In the third quarter, American Axle reported a net loss of $8 million or $0.11 per share, compared to net income of $24.8 million or $0.33 per share, in last year's third quarter. The results reflect the impact of $10.1 million in debt refinancing and redemption costs and $3.2 million in restructuring costs. On a per share basis, these costs totaled $0.18. Wall Street analysts had anticipated that American Axle would report EPS of $0.33 in the quarter. Revenues in the period were $703 million versus $647.6 million last year. This came in ahead of Wall Street analysts' consensus revenue estimates of $686.8 million. Gross margins at the company fell to 12.9 percent from 16 percent and operating margins declined from 6.9 percent to 4.3 percent. While top-line growth was strong at American Axle, investors are likely concerned about shrinking margins and the company's inability to meet earnings expectations in the quarter. When backing out the $0.18 in one-time expenses reported in the quarter, American Axle would have earned $0.07, which was well below consensus EPS estimates of $0.33.