On Feb 14, 2014, we issued an updated research report on Ford Motor Co. (F). The company posted earnings per share of 31 cents (excluding special items) in the fourth quarter of 2013, flat year over year. However, the automaker surpassed the Zacks Consensus Estimate of 28 cents.
Ford reported positive surprises in the trailing four quarters with an average beat of 14.66%. The company’s global expansion plans, its efforts to make the European business profitable, success of the One Ford plan and its continued focus on hybrid cars worked in favor of the company.
However, on the negative side, Ford expects pre-tax profit, excluding special items, to come in a range of $7 billion to $8 billion in 2014, lower than the $8.6 billion recorded in 2013. Automotive revenue is expected to be flat year over year, while automotive operating margin and automotive operating-related cash flow are expected to be lower than 2013.
Ford has been updating its older models and rolling out new ones. This involves substantial expenditure, as reflected in high structural costs in 2013. The company expects structural costs to increase in 2014 as well, in order to support higher volumes as well as expansion and improvement of its line-ups.
The Zacks Consensus Estimate for Ford’s earnings in 2014 is $1.38 per share, down 14.65% from 2013. Ford currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some stocks worth considering in the auto industry are Tesla Motors, Inc. (TSLA), Volkswagen AG (VLKAY) and Dongfeng Motor Group Company Limited (DNFGY). Tesla carries a Zacks Rank #1 (Strong Buy), while Volkswagen and Dongfeng carry a Zacks Rank #2 (Buy).
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