On January 6, we maintained our Neutral recommendation on
Ford Motor Co.
), despite its higher structural costs and economic weakness
around the world, based on its improved third quarter earnings
and growth opportunities from its expansion in the emerging
Ford posted a 17.6% rise in earnings per share to 40 cents in the
third quarter of 2012 from 34 cents a year ago. Reported earnings
surpassed the Zacks Consensus Estimate by 10 cents per share.
The growth in earnings was attributable to impressive results in
its North American and Asian operation. Total revenue slid 3.0%
to $32.1 billion but exceeded the Zacks Consensus Estimate of
Following the release of the third quarter results, the Zacks
Consensus Estimate for 2012 went up by a penny or a meager 0.7%
to $1.35 per share. Meanwhile, the Zacks Consensus Estimate for
2013 declined 0.7% to $1.47 per share. With the Zacks Consensus
Estimates for both 2012 and 2013 remaining almost flat, the
company now has a Zacks Rank #3 (Hold).
Ford is expanding its foothold in the emerging global markets
including Argentina, Brazil, China, India and Thailand. The
company expects that 70% of its global expansion will be in Asia,
primarily China and India. It anticipates that these investments
will eventually bear fruit with a 50% improvement in sales to 8
million vehicles in 2015. Small car sales as a percentage of
total sales are expected to go up to 55% by 2020 from 48% at
Ford continues to focus on hybrid vehicles. It plans to invest
$135 million for its next-generation hybrid-electric vehicles.
The company has launched all-new C-MAX, C-MAX Energi plug-in
hybrid, new Fusion Hybrid and Fusion Energi plug-in hybrid
fuel-efficient electric vehicles in 2012. It expects that hybrid
sales will improve owing to the new launches and plans to triple
production capacity of electrified vehicles by 2013.
Ford has been replacing its older vehicles with new models to
provide customers with smart technology, outstanding safety,
excellent fuel efficiency and high quality standards with greater
comfort. This initiative will further increase commodity and
structural costs affecting the company's results.
Other Stocks to Look For
Besides Ford, other stock in the automobile sector that are
currently performing well include
General Motors Company
), which carry a Zacks Rank #2 (Buy).
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
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