On Nov 12, 2013, we raised
Ford Motor Co.
) to Outperform from Neutral. The upgrade was based on several
factors including its global expansion plans, its efforts to make
the European business profitable, the success of the One Ford
plan and its continued focus on hybrid cars.
Reasons for Upgrade
Ford posted a 12.5% rise in earnings per share of 45 cents in
the third quarter of 2013 from 40 cents in the same quarter of
2012 (all excluding special items). With this, this Zacks Rank #1
(Strong Buy) stock surpassed the Zacks Consensus Estimate of 38
Revenues in the quarter grew 12.2% to $36 billion, exceeding
the Zacks Consensus Estimate of $33.8 billion. The improvement
was attributable to increased wholesale volumes in automotive
business and higher market share in all the regions.
Ford plans to restore profitability in its European operations
by mid-decade and aims to achieve long-term operating margin
between 6% and 8%. The efforts are yielding results as the
company now expects a lower loss from Europe in 2013 in
comparison to 2012.
Additionally, Ford is pursuing a major expansion plan in the
mature and emerging markets, primarily Argentina, Brazil, China,
India and Thailand. Moreover, the company is creating a new
business unit - Ford Middle East and Africa, to capitalize on the
growing importance of the Middle East and African markets.
Further, Ford's accelerated product transformation plan "One
Ford" is positively impacting the company. Moreover, the
automaker continues to focus on hybrid vehicles that played a
pivotal role in its revival since late 2006. The company
announced its plan to invest $135 million to develop key
components, including advanced battery systems, for its
next-generation hybrid-electric vehicles.
As a result of these favorable factors, we have a positive
outlook on Ford, despite rising expenditure and debt.
Other Stocks to Consider
Other major automobile stocks worth considering are
Fox Factory Holding Corp.
General Motors Company
). While Daimler is a Zacks Rank #1 stock, the other two carry a
Zacks Rank #2 (Buy).
DAIMLER AG (DDAIF): Get Free Report
FORD MOTOR CO (F): Free Stock Analysis Report
FOX FACTORY HLD (FOXF): Free Stock Analysis
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