Did you analyze how American Axle & Manufacturing (AXL) fared in its international operations for the quarter ending December 2024? Given the widespread global presence of this maker of auto parts, scrutinizing the trends in international revenues becomes imperative to assess its financial strength and future growth possibilities.

In the current global economy, which is more interconnected than ever, a company's success in penetrating international markets is crucial for its financial health and growth journey. Investors must understand a company's dependence on overseas markets, as this offers a window into the company's earnings stability, its ability to benefit from varied economic cycles and its potential for long-term growth.

Being present in international markets serves as a counterbalance to domestic economic challenges while offering chances to engage with more rapidly evolving economies. However, this kind of diversification introduces challenges like currency fluctuations, geopolitical uncertainties and varying market trends.

In our recent assessment of AXL's quarterly performance, we discovered notable trends in its overseas revenue sections, which are typically modeled and scrutinized by Wall Street analysts.

The company's total revenue for the quarter amounted to $1.38 billion, showing decrease of 5.6%. We will now explore the breakdown of AXL's overseas revenue to assess the impact of its international operations.

Trends in AXL's Revenue from International Markets

Asia accounted for 11.34% of the company's total revenue during the quarter, translating to $156.6 million. Revenues from this region represented a surprise of +12.78%, with Wall Street analysts collectively expecting $138.86 million. When compared to the preceding quarter and the same quarter in the previous year, Asia contributed $155.4 million (10.33%) and $156.4 million (10.69%) to the total revenue, respectively.

During the quarter, Europe contributed $198.7 million in revenue, making up 14.39% of the total revenue. When compared to the consensus estimate of $184.69 million, this meant a surprise of +7.59%. Looking back, Europe contributed $218.7 million, or 14.53%, in the previous quarter, and $227 million, or 15.52%, in the same quarter of the previous year.

South America generated $46.5 million in revenues for the company in the last quarter, constituting 3.37% of the total. This represented a surprise of +43.87% compared to the $32.32 million projected by Wall Street analysts. Comparatively, in the previous quarter, South America accounted for $45.8 million (3.04%), and in the year-ago quarter, it contributed $35.8 million (2.45%) to the total revenue.

Revenue Forecasts for the International Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that American Axle will report a total revenue of $1.4 billion, which reflects a decline of 12.8% from the same quarter in the previous year. The revenue contributions are expected to be 8.8% from Asia ($123.4 million), 14.2% from Europe ($199.52 million) and 2.3% from South America ($31.49 million).

Analysts expect the company to report a total annual revenue of $5.91 billion for the full year, marking a decrease of 3.6% compared to last year. The expected revenue contributions from Asia, Europe and South America are projected to be 9% ($529.62 million), 13.9% ($819.21 million) and 2.6% ($155.52 million) of the total revenue, in that order.

Wrapping Up

Relying on global markets for revenues presents both prospects and challenges for American Axle. Therefore, scrutinizing its international revenue trends is key to effectively forecasting the company's future outlook.

In a world where international interdependencies and geopolitical conflicts are ever-increasing, Wall Street analysts closely monitor these trends for companies having international presence to adjust their earnings forecasts. Of course, there are several other factors, including a company's standing within its home borders, that influence analysts' earnings forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

With an impressive externally audited track record, our proprietary stock rating tool - the Zacks Rank - harnesses the power of earnings estimate revisions and serves as an effective indicator of a stock's near-term price performance.

American Axle, bearing a Zacks Rank #3 (Hold), is expected to mirror the broader market's movements in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

A Look at American Axle's Recent Stock Price Performance

The stock has witnessed a decline of 4.4% over the past month versus the Zacks S&P 500 composite's a decrease of 0.5%. In the same interval, the Zacks Auto-Tires-Trucks sector, to which American Axle belongs, has registered a decrease of 13.3%. Over the past three months, the company's shares saw a decrease of 15.3%, while the S&P 500 increased by 1.4%. In comparison, the sector experienced a decline of 1.9% during this timeframe.

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This article originally published on Zacks Investment Research (zacks.com).

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