Shares of Aptiv PLC (NYSE:APTV), an artificial intelligence (AI) company that has been revolutionizing the way we drive, have been on the rise since the start of June, advancing approximately 50%.
Thanks to strong third-quarter results, a strategic acquisition, and a joint venture with Hyundai Motor Group, APTV stock recently broke through a tested resistance level.
Thanks to solid near-term and long-term outlooks, Aptiv stock is definitely one of the most compelling AI stocks right now.
APTV Stock Overview
A whopping 94% of all vehicle accidents are caused by human error. Those errors lead to an estimated 1.4 million road deaths annually. Aptiv PLC believes its AI technology will help drive those numbers significantly lower. (Source: “APTV Overview,” Aptiv PLC, last accessed November 6, 2019.)
Aptiv is an automotive technology company whose AI technology(NYSEARCA:XLK) is helping usher in the next generation of autonomous vehicles. It is also actively working on the next generation of smart cities and connectivity.
While many AI companies are jumping on the autonomous driving bandwagon, Aptiv PLC is looking at them in the rearview mirror.
In 2015, Aptiv came onto the radar of Wall Street investors when its technology helped a vehicle complete the longest automated drive ever, travelling 3,400 miles from San Francisco to New York City. Aptiv’s fully automated AI technology was responsible for 99% of the drive. (Source: “Making mobility work,” Aptiv PLC, last accessed November 6, 2019.)
In addition to conducting the first coast-to-coast automated drive in the U.S, Aptiv was also the first company to commercially deploy autonomous vehicles around the world.
It currently operates more than 100 autonomous vehicles around the world, with its largest commercial deployment being in Las Vegas. (Source: “Aptiv and Hyundai Motor Group to Form Autonomous Driving Joint Venture,” Aptiv LPC, September 23, 2019.)
The company has provided more than 70,000 paid autonomous vehicle rides to more than 2,700 destinations. Its average passenger rating is 4.95 out of five stars.
How does Aptiv PLC do it? While global tech companies are waxing eloquent on the potential of their software, Aptiv PLC understands that innovation is only as valuable as its ability to be implemented.
A lot of data is needed to help safely navigate a vehicle autonomously, and it’s expensive to transmit all of that information to the cloud.
Aptiv PLC’s smarter AI technology sifts through that data and only uses what is needed. Or, in the company’s words, “you don’t need the haystack uploaded to the cloud, just the needles.” (Source: “Making mobility work,” Aptiv PLC, op. cit.)
|APTV Stock Information|
|Market Cap||$23.6 Billion|
|Shares Outstanding||255.3 Million|
|50-Day Moving Average||$87.91|
|200-Day Moving Average||$81.94|
(Source: “Aptiv PLC (APTV),” Yahoo! Finance, last accessed November 5, 2019.)
Aptiv stock has been on a bit of a roller coaster ride, but for the most part, it has followed the trajectory of the broader stock market. APTV stock has just experienced some bigger swings than other stocks.
The company’s shares have been performing well since the start of June, and in early November they broke through a tested resistance level near $91.00, hitting a new 52-week high of $96.35.
The auto industry can be notoriously volatile, especially when the economy is heading toward a recession. But we’re not seeing that right now with Aptiv.
Moreover, thanks to the Internet of Things, 5G technology, and a more connected world, the demand for AI technology is only going to get bigger and bigger.
Chart courtesy of StockCharts.com
Aptiv & Hyundai Form Autonomous Driving Joint Venture
On September 23, Aptiv PLC and Hyundai Motor Group announced plans to form an autonomous driving joint venture. (Source: Aptiv LPC, September 23, 2019, op. cit.)
The 50/50 joint venture is valued at $4.0 billion, with Aptiv contributing its autonomous driving technology and intellectual property. Hyundai will contribute $1.6 billion in cash and $400,000 in vehicle engineering services, research & development, and access to intellectual property.
The joint venture will begin testing fully driverless vehicles in 2020 and it plans to have an autonomous driving platform for robotaxi providers, fleet operators, and automotive manufacturers available in 2022.
Aptiv Expands Portfolio With gabocom Acquistion
On October 2, Aptiv announced that it signed a definitive agreement to acquire gabo Systemtechnik GmbH (otherwise known as gabocom) for roughly $310.0 million. (Source: “Aptiv to Acquire gabocom,” Aptiv PLC, October 2, 2019.)
With $100.0 million in annual revenue, the Germany-based gabocom is a leading provider of cable management and protection solutions for the telecom industry.
The transaction is expected to close by the end of 2019 and be “modestly accretive” to Aptiv’s earnings per share in 2020.
Strong Third-Quarter Results
On October 30, Aptiv announced that its revenue, for the third quarter ended September 30, increased two percent year-over-year to $3.6 billion. (Source: “Aptiv Reports Third Quarter 2019 Financial Results,” Aptiv LPC, October 30, 2019.)
The slight gain is more impressive when you consider that the General Motors Company (NYSE:GM) strike in the U.S. removed approximately $70.0 million from those results.
The company reported third-quarter net income of $246.0 million ($0.96 per share), a 10.8% increase from the $222.0 million ($0.84 per share) in the same prior-year period. Adjusted net income came in at $325.0 million ($1.27 per share), compared to $329.0 million ($1.24 per share) in the same period last year.
The GM strike hurt adjusted earnings to the tune of $0.10 per diluted share.
Net cash flow came in at $325.0 million, a 135.5% increase from the $138.0 million recorded in the third quarter of 2018.
During the third quarter of 2019, Aptiv repurchased 500,000 shares for approximately $44.0 million. During the first nine months of 2019, Aptiv repurchased 5.0 million shares for approximately $390.0 million. All repurchased shares were retired.
The company has roughly $2.1 million available for future share repurchases.