American Axle & Manufacturing Holdings, Inc. (AXL): A Bull Case Theory 

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We came across a bullish thesis on American Axle & Manufacturing Holdings, Inc. on Cornerstone Value’s Substack. In this article, we will summarize the bulls’ thesis on AXL. American Axle & Manufacturing Holdings, Inc.’s share was trading at $6.22 as of October 3rd. AXL’s trailing and forward P/E were 17.37 and 8.64 respectively according to Yahoo Finance.

American Axle (“AXL”) is set to merge with driveline competitor Dowlais (“DWL”) in a transformative deal that creates a clear market leader in the Tier 1 auto supplier space, positioning the combined entity as the sixth-largest global auto parts producer. The merger provides substantial industrial logic, including complementary product lines, cross-selling opportunities, and diversification of geographic exposure, while mitigating legacy risks from AXL’s ICE-heavy portfolio.

The transaction is expected to generate $300 million in annual run-rate cost synergies over three years, underpinned by credible third-party audits and significant overlap in manufacturing and R&D footprints. Half of the synergies derive from purchasing power, while revenue synergies emerge from integrated driveline solutions, potentially increasing OEM content per vehicle by 150-200%.

AXL’s U.S.-focused SUV and pickup truck platforms provide durable core revenue, insulated from the secular EV transition, while reshoring trends further strengthen its market position. The combined company will have robust cash flows capable of deleveraging over three to five years, with the potential to direct free cash flow toward debt reduction or shareholder returns. Despite market concerns around legacy leverage, tariff risks, and ICE exposure, the merger creates a self-funding, highly cash-generative entity with upside even in a flat global light vehicle production environment.

With AXL shareholders retaining 51% of the combined company, the structure includes $811 million in cash for DWL shareholders, financed partly by $2.2 billion in new debt, maintaining leverage neutrality. Even under conservative assumptions, the CombineCo could deliver ~350% upside over five years. The merger not only resolves long-standing overhangs from AXL’s prior acquisitions but also unlocks substantial value through scale, synergies, and strategic positioning, offering an attractive risk/reward profile for investors willing to navigate the cyclical auto sector.

Previously we covered a bullish thesis on Blue Bird Corporation (BLBD) by KyleAdamsStocks in December 2024, which highlighted the company’s market leadership, resilience across fuel types, and capacity expansion driving growth. The stock has appreciated approximately 37.78% since our coverage as the thesis played out. The thesis still stands as production ramps continue. Cornerstone Value’s Substack shares a similar perspective but emphasizes American Axle’s merger with Dowlais, highlighting synergies and strategic scale benefits.

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