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The Zacks Analyst Blog Highlights: Ford Motor, Toyota Motor, General Motors, Visteon and Delta Air Lines

Zacks Equity Research

For Immediate Release

Chicago, IL – April 4, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Ford Motor Co. (F), Toyota Motor (TM), General Motors Company (GM), Visteon Corp. (VC) and Delta Air Lines (DAL).

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Here are highlights from Wednesday’s Analyst Blog:

Ford Recalls Taurus and Lincolns for Fuel Tank Leaks

Ford Motor Co. (F) revealed that it would recall 3,500 units of 2012 Ford Taurus and the 2012 Lincoln MKS sedans as well as the 2013 Ford Explorer sport utility vehicle (:SUV) in order to fix their fuel tanks that can leak after a crash. More than 3,000 units of the vehicles will be recalled in the U.S.

Ford manufactured the recalled vehicles at its Chicago assembly plant. The company built Taurus and MKS models between Jul 2011 and Jan 2012 and the Explorer SUV in Mar 2012.

It has been found that the fuel tanks in the vehicles are equipped with an improperly molded seam. So far, Ford received six reports of tanks with a fuel odor or leak due to the problem. However, the automaker is not aware of any accidents or injuries associated with it.

Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family.

Later on, a string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts. Last year, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles.

According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to a late recall of millions of defective vehicles.

Last month, Ford announced plans to recall 7,150 vehicles manufactured in November last year due to a problem with the child lock on the left rear door. About 5,650 vehicles will be recalled in the U.S. The recall involved redesigned 2013 Ford Escape crossover, which has been recalled multiple times last year.

Recently, General Motors Company (GM) also announced plans to recall 33,700 units of Buick LaCrosse sedans and Cadillac SRX crossover vehicles globally from the 2013 model year in order to fix a software glitch that could lead to a crash. General Motors will recall 26,582 vehicles in the U.S. and the remaining vehicles in Canada, Mexico, the Middle East and China.
Ford, a Zacks Rank #3 (Hold) stock, posted a robust 55.0% rise in earnings per share to 31 cents in the fourth quarter of 2012 from 20 cents in the same quarter of 2011 (all excluding special items). With this, the company has beaten the Zacks Consensus Estimate of 26 cents.

Ford’s fourth-quarter pre-tax profit of $1.7 billion was the highest in a decade. Meanwhile, net profit surged 55.7% to $1.2 billion from $797 million a year ago. Thanks to the impressive North American results and, to some extent, solid improvements in Asia Pacific Africa operations.

While we remain on the sidelines about Ford, stocks from the same industry that warrant a look include Visteon Corp. (VC) with a Zacks Rank #1 (Strong Buy).

Delta Traffic Dulls, Lowers Guidance

Leading U.S. passenger carrier Delta Air Lines (DAL) witnessed stagnancy in traffic in Mar 2013, due to lackluster regional performance, partially offset by better results in Latin America.

The company’s airline traffic – measured in revenue passenger miles or RPMs, which implies revenue generated per mile per passenger – remained nearly flat year over year at 16.5 billion. Consolidated capacity (or available seat miles/ASMs) for the month fell a marginal 0.6% from Mar 2012 to 19.4 billion.

The load factor or percentage of seats filled by passengers, however, went up 60 basis points from the third month of 2012 to 84.7%. Passenger revenue per available seat mile (:PRASM) improved 2.0% year over year, supported by efficient operations in the Transatlantic region. The company registered a completion factor of 99.3%, with nearly 84.9% of the flights on schedule.

For the first three months of 2013, Delta generated RPMs of 43.1 billion (down 0.6% year over year) and ASMs of 53.0 billion (down 2.6% year over year), while load factor was 81.2%, up 150 basis points.

Although traffic results for the first three months of 2013 failed to impress, Delta expects to witness a profitable first quarter, with unit revenue growth of 4% to 4.5%. The present forecast, however, is lower than the earlier guidance of 4.5% to 5.5%.

Operating margin expectation remains unchanged at 2.5% to 3.5%, indicating an increase from the prior-year quarter. Although the company expects non-fuel unit costs in the first quarter to increase 5–6% year over year, the projection has improved from the one given previously. Delta’s consistent efforts to reform its cost structure amid the present economic scenario seem to be paying off.  


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