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Ford's (F) Earnings Miss Estimates in Q4, Decrease Y/Y

Ford Motor Co.F posted adjusted earnings per share of 30 cents in the fourth quarter of 2016. The reported figure was 28 cents lower than that in fourth-quarter 2015 (excluding special items). Earnings also missed the Zacks Consensus Estimate of 32 cents per share. Pre-tax income (excluding special items) was $2.1 billion, about $0.5 billion lower than the year-ago quarter figure.

Net loss attributable to Ford was $0.8 billion, down by $2.7 billion from the year-ago quarter figure.

Ford logged revenues of $38.7 billion that surpassed the Zacks Consensus Estimate of $35.55 billion. Revenues were $1.6 billion lower than a year-ago.

Ford Motor Company Price, Consensus and EPS Surprise

Ford Motor Company Price, Consensus and EPS Surprise | Ford Motor Company Quote

2016 Results

Ford's adjusted earnings per share of $1.76 in 2016 were 17 cents lower than the figure recorded in 2015 (excluding special items). Earnings also missed the Zacks Consensus Estimate of $1.80 per share. Pre-tax income (excluding special items) was $10.4 billion, which was $0.4 billion lower than the year-ago quarter figure.

Net income attributable to Ford was $4.6 billion, about $2.8 billion lower than the year-ago quarter figure.

Revenues in the 2016 fell $2.2 billion to $151.8 billion.

Ford Automotive

Ford logged Automotive revenues of $36 billion. Revenues were lower by $1.9 billion on a year-over-year basis. Wholesale volumes decreased by 68,000 units to 1.71 million units. Pre-tax profit declined to $2 billion from $2.3 billion a year ago.

In North America , revenues fell 7% to $23.1 billion. Wholesale volumes declined 13% year over year to 703,000 units. Further, pre-tax profit decreased to $1.96 billion from $2.03 billion due to higher product costs.

In South America , revenues increased 18% to $1.4 billion due to higher volume and better pricing. Wholesale volumes rose 13% to 90,000 units. Pre-tax loss amounted to $293 million, narrower than a pre-tax loss of $295 million in the prior-year quarter. The company incurred loss in the quarter due to the unfavorable economic environment.

In Europe , revenues declined 2% to $7.2 billion. Wholesale volumes remained flat year over year at 390,000 units. The region recorded a pre-tax profit of $166 million compared with $131 million a year ago. The upside was driven by improved cost performance.

In the Middle East & Africa segment, revenues declined 12% year over year to $0.9 billion. Wholesale volumes plunged 24% to 41,000 units. The region reported a pre-tax loss of $71 million, which compared unfavorably with pre-tax profit of $13 million in the year-ago quarter.

In the Asia-Pacific region, revenues of $3.4 billion remained flat on a year-over-year basis. Wholesale volumes jumped 9% to 483,000 units. Market share in the region was 4.2% compared with the year-ago level of 3.9%. The Asia-Pacific region reported a pre-tax profit of $284 million, down from $444 million in the year-ago quarter.

Financial Services

Ford Credit reported a 28% decline in pre-tax profit to $398 million in the fourth quarter of 2016. The deterioration was due to pension settlement in Ford Credit Europe and unfavorable lease residual performance.

All Other

All Other - consisting primarily of net interest expenses - reported a pre-tax loss of $294 million. The reported loss was $40 million lower than the year-ago period.

Financial Position

Ford had cash and cash equivalents of $15.9 billion as of Dec 31, 2016, up from $14.27 billion as of Dec 31, 2015. Automotive debt increased to $15.9 billion as of Dec 31, 2016, from $12.8 billion as of Dec 31, 2015.

In 2016, the company's cash flow from continuing operations increased to $19.8 billion from $16.2 billion a year ago. Automotive operating cash flows improved to $6.4 billion in 2016 from $5.5 billion in the year-ago period. Capital expenditures declined to $6.99 billion from $7.19 billion in 2015.

2017 Guidance

Ford expects 2017 pre-tax profit to be lower than 2016. This is due to higher investments in electrification, autonomy and mobility.

2017 automotive revenues are expected to be same as the 2016 levels. The company also anticipates Automotive segment operating cash flow to decline in 2017 from the 2016 levels. Adjusted earnings per share and automotive operating margin are also expected to be lower than 2016.

Ford expects 2016 pre-tax profit in North America to be below the 2016 level of $9 billion. Further, Ford expects to turn around in South America from a loss of $1.1 billion incurred in 2016. In Europe, the company anticipates lower profits than $1.2 billion recorded in 2016. In the Middle East and Africa unit, it expects to record better performance. This unit had incurred a loss of $302 million in 2016. In the Asia-Pacific, Ford estimates pre-tax profit to be higher than the 2016 level of $627 million.

Moreover, the automaker expects that Ford Credit's profits in 2016 will be lower than the 2016 level of $1.9 billion.

Price Performance

The Ford stock has underperformed the Zacks categorized Auto Manufacturers-Domestic industry in the last three months. This was due to poor guidance for 2017 and President Donald Trump's public criticism of the company's plans to shift small car production to Mexico. Share price of the stock increased 9% over this period, while the industry saw a 17.4% gain.

Zacks Rank

Ford currently carries a Zacks Rank #4 (Sell).

Some better-ranked companies in the auto space include Fox Factory Holding Corp FOXF , Oshkosh Corp. OSK and GKN plc GKNLY .

Fox Factory sports a Zacks Rank #1 (Strong Buy). The company has an expected earnings growth rate of around 16.6% for the current year. You can see the complete list of today's Zacks #1 Rank stocks here.

Both Oshkosh Corporation and GKN carry a Zacks Rank #2 (Buy). Oshkosh Corporation has a long-term growth rate of 8.4%, while the same for GKN is pegged at 6.3%.

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Ford Motor Company (F): Free Stock Analysis Report

Oshkosh Corporation (OSK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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