Ford (F) dealt with a major plant recall and supplier parts shortages while the company prepared for the launch of the new F-150. Ford just released its third-quarter earnings on Friday; did these setbacks impact Ford’s results? Is now a good time to buy in?
Company Profile
Ford is the quintessential story of American ingenuity. At the turn of the 20th century, Henry Ford perfected the assembly line and introduced the Model T to the American economy. And, the rest, they say is history: Over a century later, Ford has grown to be the second largest automaker in the U.S. and the fifth largest in the world.
In addition to its namesake brand, Ford also sells luxury cars under the Lincoln name. With over 181,000 full-time employees worldwide, Ford brought in nearly $147 billion in sales last year.
Earnings Rundown
In the third quarter, Ford experienced a 34% drop in profit year over year. Adjusted earnings per share were 24 cents, which beat analyst expectations of 19 cents per share.
Net income for the third quarter was $835 million, or 21 cents per share. This is down from $1.27 billion, or 31 cents per share, that Ford reported last year. Net income included pre-tax special item charges of $160 million related to Ford’s European transformation plan. Total revenue was down 6% and sales declined by 2%. Sales to dealers declined 8%; which Ford attributes to its plant’s five-week shutdown during the quarter.
Looking ahead, Ford has big plans for fiscal year 2015, fueling buzz with a new line of products like its aluminum-bodied F-150 pickup truck.
Current Ratings
At a glance, Ford has been a mixed bag when it comes to ratings, going back and forth between “hold” and “sell” over the past year. It’s not a surprise, considering Ford stock currently receives an “F” for its Quantitative Grade.
Ford’s fundamental metrics are lackluster, with only a handful of strong grades for cash flow (A), return on equity (A), and earnings surprises (B). The areas that the auto maker still needs to work on are sales growth (D), operating margin growth (C), earnings growth (C), earnings momentum (C), and analyst earnings revisions (F). Averaging together these eight fundamental metrics, Ford receives a “C” for its Fundamental Grade.
As of this posting, Oct. 27, I consider Ford a “D-rated sell.”
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
