On Jan 7, 2013, we downgraded Ford Motor Co. (F) to Neutral from Outperform based on its weak guidance for 2014.
Why the Downgrade?
Ten out of 16 analysts covering Ford revised their estimates downward for the company’s 2013 earnings in the last 30 days, while 12 out of 16 analysts slashed their estimates for 2014. As a result, the Zacks Consensus Estimate for Ford’s 2013 earnings per share fell 4.8% to $1.58. Moreover, the Zacks Consensus Estimate for 2014 plunged 19.3% to $1.51 per share.
The downward revisions were mainly due to the weak 2014 guidance provided by Ford. The automaker expects pre-tax profit, excluding special items, to be $7 to $8 billion in 2014, down from $8.5 billion projected for 2013. 2014 pre-tax profit in North America is expected to be lower than 2013, while in Asia Pacific it is expected to be in line with the 2013 level.
Ford expects to report break-even results in South America in 2014. In Europe, it expects to incur losses due to the ongoing restructuring activities, although results are expected to improve from 2013.
Nevertheless, Ford plans to restore profitability in its European operations by 2015 and aims to achieve long-term operating margin between 6% and 8%. Moreover, its global expansion plans, efforts to make the European business profitable, the success of the One Ford plan and continued focus on hybrid cars are positives.
Ford is one of the largest automobile producers in the world along with General Motors Company (GM), Honda Motor Co., Ltd. (HMC) and Toyota Motor Corporation (TM). Currently, Ford has a Zacks Rank #5 (Strong Sell).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment