On Oct 8, 2013, Zacks Investment Research upgraded Ford Motor Co. (F) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Earlier this week, Ford announced plans to increase its global manufacturing capacity. The company aims to boost capacity by 30% by 2017 by running three shifts daily at most of its plants. Additionally, the automaker plans to increase its average production at all its plants to over 4 from 3 at present.
Ford is pursuing a major expansion plan in the mature and emerging markets, primarily Argentina, Brazil, China, India and Thailand. The company expects the Asia-Pacific region to account for 70% of its global growth in this decade, mostly from China and India. The region is also likely to account for 40% of its vehicle sales in the next four to five years. As part of its expansion strategy, Ford recently inaugurated its first authorized Ford dealership in Myanmar.
Ford’s accelerated product transformation plan “One Ford” is positively impacting the company. The foremost mission is to produce common vehicle models for all of its global segments within five years from now. Another key objective of the plan is to shift focus from trucks to small cars and deliver more vehicles from fewer core platforms. Ford already renewed 70% of its product line-up along with a few discontinuations and has planned several new launches under the “One Ford” plan.
Ford reported positive earnings surprise in the last 4 quarters with an average beat of 20.52%. The company posted an impressive 50% rise in earnings per share to 45 cents in the second quarter of 2013 from 30 cents in the same quarter of 2012 (all excluding special items). With this, Ford surpassed the Zacks Consensus Estimate of 37 cents.
Revenues in the quarter grew 14.4% to $38.1 billion, exceeding the Zacks Consensus Estimate of $35.4 billion. The improvement was attributable to increased wholesale volumes in automotive business and higher market share in all the regions.
Currently, the Zacks Consensus Estimate for Ford’s 2013 earnings stands at $1.55 per share, up 9.57% over 2012. The estimate for 2014 is $1.77 per share, up 14.78% from the prior year.
Other Stocks to Consider
Other major automobile stocks worth considering are Daimler AG (DDAIF), General Motors Company (GM) and Fuji Heavy Industries Ltd. (FUJHY). While Daimler and Fuji carry a Zacks Rank #1 (Strong Buy), General Motors carries a Zacks Rank #2 (Buy).