"Ford is getting away from having forklifts deliver any parts stock to the assembly line. They will be "Fork Free Zones"
So.. What wil they use instead to move parts? First picture that popped in my head was people using wheel barrows or carts and then loading an elevator from the carts to carry things higher Second, better thought is maybe there is now no need to carry things higher (the places parts will be going are lower than they were before). Or....? Just curious.
Johny- I hadn't thought about reducing rust with aluminum ( living in TX for 30 years, where rust is simply not a problem). Maybe the MS analysts are non-drivers taking taxis in Manhattan, so they don't have the maintenance issues with road-salt-in-winter and the rust that then pops up on steel that other northerners see?
Thanks. (1) Profit margin trumps market share, so reducing retail fleet sales if competitors are selling for too little makes sense. Sales of commercial fleets and police interceptors are higher margin than the retail (airport rental) fleets, and they are not being cut back, I'd assume. (2) Looks like they are managing the temporary plant downtime due to F-150 plant re-toolings through dealer inventory management. That also translates into no excess discounting??
Good post as usual, Q.
Is there an Inverse Head-and-shoulders? What month or week is the head. as I'm not sure how to find it.
Some guesses about MS-- They don't want F to go above $18 yet, think F is within striking range of that, so are "jawboning" to keep it down, prhaps told a fund they advise to get out a bit ahead of their announcement, to sweeten the shorting party.
yes, some analysts do pretend that a temporary cost is permanent, thinking here of the temporary costs from drastic re-tooling of certain Ford plants to make the new, higher mpg F-150s. Yes, the downtime means nothing is made at those plants during the change-around, but that's temporary. Yes, some competitors will copy to the extent things are not covered by patents, but they clearly have not started on the several-year program needed to do that. What kind of patents are on the alloys and reinforcing structur to make the aluminum bodies stonger?
Plus, F the stock has a dividend advantage that beats short-term Treasuries and is equivalent in yield to a basket of selected longer term US Treasuries. That's , a plus that gos on steroids if the supply of Treasuries offered for purchase goes down, st the same time demand for them rises (example:shrinking budget deficit can reduce supply as the govt sells fewer bonds, while the international demand for them increases lower rates on Gerrman bonds make the higher rates on US Treasuries look more desirable)
Check Forbes August issues for an article on ten reasons why keeping any long-term US Treasuries, not selling them, is perhaps a good investment. Much of what the article says applies, as wel,l to stocks with sustainable dividends of a competitive size to Treasury yields..
Hi, LoveLincolns. It's not a normal market unless people are jittery! I agree that it may not be good for dividends go too high--they need to be sustainable, biz improvements need to be paid for, and some rule-out too high yields as a warning sign of distress. The new F-150 will be a big innovation, wonder of the competition is planning to copy? Ford will have the headstart if these are successful, a big possibility if mpg improves noticeably without a decline in power,, once again, adding to earlier gains from ecoboosted engines, etc.
For newbies-- A lot of the "star posters" on the Ford board (meaning most knowledgeable) are in this thread answering spock's question. They know tons about retooling, shipment processes, dealer inventory, sell schedules, engine design, platforms, plant capacity, shift schedules, model revisions and design, etc, because they actually "worked the biz". Those who have retired know lots of people still at Ford that they can ask. They know which supply trucks they see going down Cleveland, Chicago and Detroit streets and rails. Their participation has made this company and industry easy for newbies to understand. i once was one, asking the typical "dumb questions",and am deeply grateful to these people.for patiently teaching me so much.
Fly, LoveLincolns, Q and Jeff, haven't said Hi for a long time. Hope all is well! (Am just about finished posting for today.
Yes, Ford climbs a ladder. The next rung, $18, has to happen first.
VALUATION. Because of past stock pain, a lot of analysts shifted, away from guessing the future for F, to instead waiting for actual results to show up before upgrading.
We longs became used to that, so do it, too. However, what's new? It's this: What Ford said would happen for China has indeed shown up, ditto, more recently, for Europe. There's a growing list of CORRECT forecasts,
1* Too many sectors of the stock market (non-auto) are up with very high forward P/Es (based on future earnings, not current). That worries analysts, who advise holding, not buying more of THOSE sectors.
The result? You see the current consolidation in the marketwide etfs. Thus, SPY coasts, doesn't make new highs.
2 *If "they" want SPY etc to reach further new highs, the analysts who advise mutual funds then may look for whatever OTHER sectors merit a stronger look, ones whose FUTURE earnings have NOT YET been properly valued, just their current earnings.
3*Related? We may be seeing signs of rotation into PARTS of the auto sector, PARTS of the tech sector, PARTS of basic materials, PARTS of retail, and PARTS of the emerging economies. Forget heath. Forget staples. Finance? unclear.
4*It's not uniform across all companies and countries inside chosen sectors, but VERY selective. The analysts may/will try to focus on just those whose future earnings guidance, previously ignored, has come true with a high probability? For autos and for high-tech autos, especially, that would be Ford, maybe a few others.
5*Maybe this rules out the German carmakers, for now, maybe "channel-stuffing" while they wait for their excess but aging employees to retire? Forcing that to happen early with restructuring is painful, so their country doesn't want it. Perhaps they've waited until F and GM finished their restructures first, to reduce the total pain experienced at any one time??).
muffin-(1) am trying to find the analyst. Hints as to who last upgraded Ford? (2) Did find a piece last month at the SchaeffersResearch website, done by Elizabeth Harrow, dated July (the 14th maybe). She gives details on the positive effects that July's upgrades triggered for Ford options, which you can read about there
Two big-deal upgrades in July set-off the good options action, she says, for "auto giant Ford Motor Company (NYSE:F)". These coincided with upgrades on "athletic apparel specialist Nike Inc (NYSE:NKE), and data storage provider SanDisk Corporation (NASDAQ:SNDK)".
So, one pattern might be favoring the large-cap "consumer discretionary" sector (shopping was hurt by extra-bad cold weather in Q1, but is bouncing back now in the warm season) and tech choices. Modern Ford is both discretionary (shoppers choose which month to buy, if not forced by an accident into buying immediately) AND high tech ('office in a car", patents on software regulating high mpg technology)..
(3) Harrow says Ford saw a
"price-target hike to $20 from $19 at Barclays"
"to $21 from $18 at Goldman Sachs."..
(4) "they're north of the stock's current 52-week high of $18.02, which was tagged back in October. "
I lost too much money on one of my "learning experience" pharmaceuticals, so am happy Ford has made up for that. More on the THIRD reason for Ford profits that will show up in the next 12 months:
USA RESULTS. Shorts will be confused by a TEMPORARY downtick in US earnings first, as the latest round of US re-toolings wiil not cost zero. Ford's market share takes a quick dip as closed factories mean less to sell of certain models. ( Shorts were VERY confused, the same way, over European re-toolings.).
Ford will then please longs, will "more than make-up" for any short-term drop in profits, by a larger and longer-lasting increase in profits later, with superior new models at US dealers. The NET, or combined, value of short-term loss, plus long-term profit boost? Nicely positive, just like the last time Ford did that in the US, causing Ford to "lead the pack" out of recession into recovery.
WRINKLES. Also, remember what happened to F's price when the "new GM" did its "recovery IPO"? Maybe, make similar guesses regarding Fiat doing its IPO for Chrysler?
Think you're right, muffin. F has gone up with "Positive alpha" (so, doing better than otherwise expected when the market dips down). That's been true for months. TWO reasons justify this "up with positive alpha". They are Ford Motor's rising profits in
**Europe (due to the plant re-toolings to make superior products after a re-structuring that German automakers, sad for them, failed to copy) AND , your favorite,
**China (new factories opening, on line to supply new dealerships that have expanded into more Chinese cities, places chosen with an accurate knowledge of the "market geography" of China's emerging, growing middle class).
IMPORTANT. There will be a THIRD reason, growth in the US region, to unfold later.
vin--(1) Excellent financial numbers--did you get the 90th percentile comparison across the sectors by consulting a data service? Which one? Or, did you do the counting yourself? If yes, thanks. (The CEO is maybe doing as well as can be expected? given doctors being slow to adopt and too many on his Board appearing toxic--Violating company bylaws, no proxy filed this year?)
(2) I've minimal shares, true for now, staying in just to get notifications while the Vivus board (First Manhattan/FMC/First Biomed- controlled) is way overdue on the annual meeting. Also,that lets me participate in certain lawsuits if the board's cone of silence and continued violation of company bylaws, etc, continue.
(3) Found a letter written to FMC by the SEC last year. The SEC chided FMC for improper marketing of their Vivus proxy effort in 2013 (had to do with FMC claiming positive results elsewhere and making it sound like positive results would happen again).
(4) The SEC's letterwriter seemed unaware of FMC's other failure to be fully honest, not disclosing their negative results with Aspect Medical late in 2009, producing THREE shareholder lawsuits.
NOTES: The 3 suits followed FMC forcing an under-valued sale, badly-timed at recession-bottom, no shareholder vote requested, after imposing a suit-worthy cone of silence by skipping the annual meeting and shoving the sale biz into a special committee. Of its piddly 3 members, 2 were outside the pharm sector, so ignorant of sector valuation and without needed connections to prospective buyers inside the sector. The CEO overrode them, found buyer Covidian, & testified against FMC.
Covidian was, i think, newsworthy for tax-shirking- Setting up a FAKE HQ in Ireland,while their CEO and REAL HQ are in Boston. This is permitted by a deregulating Congress that ignores the fact that deregulation means FEW "high-up better-than-thou" boss-types go to jail, no mattter how bad their sins in failing to properly supervise.
Interesting, Q, (1) that opinions changed so drastically "before vs after" getting all the info.
(2) The "surplus" (3100-600) may split 3 or 4 ways,
part to to the customer (Ford believes in giving customers value per dollar),
part to Ford as profit,
part to Ford for employees&pension plan, and
part to aluminum suppliers.
About the last, It's good that the surplus is large, as thatm as you note, allows leeway-- the increased demand for aluminum has already raised share prices for AA, CENX and other aluminum producers, a strong inkling that many believe aluminum prices may go up.
Norsk Hydro released earnings this week, in the midst of their retooling in Europe that will add a new line to do aluminum sheeting for auto/truck bodies. They indicate there is a bottleneck inside the European supply chain for aluminum that involves warehouses (run by the LME, London Metal Exchange?). If I understand it correctly, inventory is declining at the warehouses, while the backlog of orders needing delivery now stretches out to two years. The unprepared warehouses have raised prices, trying to reduce demand, but one big warehouse has been more constructive, has taken steps to speed up releasing stored product for delivery.
SIDE NOTE: The price increase by warehouses regards the middle of the supply chain. This is odd/temporary as prices for aluminum out of the ground (bauxite, alumina) are still low (supply still in excess as warehouses are not yet buying enough, preferring to deplete more of their own inventory first). The miners thus are still ringing up LOSSES, as are AA and CENX, the parties assumed to place orders with the warehouses. They are NOT YET seeing enough of an increase in demand to make up for China's shift from infrastructure-building. to consumer building, but may soon, especially if other pickup-makers copy Ford (Oddly, Norsk Hydro has stayed in the green, perhaps as it is more diversified, being an hydroelectric power producer.)
Thanks for the timetable detail. Nothing is happening in Cleveland or Chicago, I asume Q, hope you still have time for filmmaking.
yes, am not sure of the exact timetable, others here should know-- Ford would try to overstock and reduce discounts ahead of any shutdowns in order to avoid depleting dealer inventory. They remove the old and add the new and make sure the building structure is correct for that. There will be testing to make sure all works. Doing aluminum instead of steel bodies could be tricky? make testing not an easy thing and the time table thus not totally predictable? Wish I knew more about that.
What's predictable? Costs go up TEMPORARILY, FIRST, to make the retooling happen, so earnings take a predictable hit, before new income from the new stuff makes profits later go up. Some will pretend anything temporary is permanent and that there will be no income rise later, but longs have watched the same process with China and Europe and know how it works.
The Valuewalk website has the article, dated July 16, by Mark Melin. If I understand all correclty, it shows charts of odd trade activity for Ford early on July 11, verifying a sudden and unexpected huge spike in machine quote activity. It definitely was machine-run as it was equivalent to making 80,000 quotes per second.
Those watching considered this clear evidence of "front-running", a type of machine-cheating that hurt buyers at that second, essentially manipulating quotes to withdraw shares that had been for sale a mili-second earlier, even though not sold to any other buyer. A buyer buying "at market" would thus be tricked into paying more. A limit buyer would get fewer shares than expected from the visible ask.
The chart indicates the July 11 cheat took place between 9:46:47:570 and 9:46:47:575, maybe :573-:574 to be more precise. The cheated buyer was a hedge fund trader who works for a big investor. He wants to stay anonymous in order to avoid retribution from others in the industry. The trader, however, asked HFT researcher Eric Hunsader to look for and report evidence of the cheat. The time chart is one result that Hunsader reported to Melin for his article.
The cheated buyer saw the orginal ask for 20,000 shares sitting at $17.38, thought the price fair, so used his HUMAN FINGER to push a key to buy, but only got 12,133 shares. The rest of the shares were quickly withdrawn as a machine "saw" his order AS it came in and, then, before the buy could move through al the sell orders at that price point, moved the cheat shares to a higher asking price.
Moe- 1) Ford never actually reports the ex-div date, right? You are supposed to look at the record date (they report on August 1 this time) , and then count one business day back? 2) -Do you know much about the Venezuelans not letting currency conversions into dollars occur-- I guess we will find out tomorrow if it has about the same effect on South American salesas it did last quarter.
Moe and Fly and Questinator and LovLincolns and Muffin the rest, hope you all are doing well. Am excited about the aluminum body & factory retoolings for the new pickups. The latest Mustang has really caught Hubbie's eye, as it's finally European enough for him.
FAMILY STORY--We have now reached the stage on his beloved but ancient Fiat Spyder (Spider?) whereby the driver-side door occasionally pops open (WHILE driving) and he has to grab it quick and pull it shut. I wanted to wire it shut, but he says no, as he goes on safe streets only. I can't look. Our son says he needs another year of us helping with his college loans, so the Mustang "buy date" is out a year-- will be the Mustang, or possibly a hybrid Lincoln MKZ, though our daughter has pushed for me to also get a Ford Fiesta, same as she has, instaed of sharing a new car.
Lots of good Ford choices nowadays. I'm doing stock DD this week, but don't have the time to do as good a job as I used to do. Ford has an Investors Day again this year??