Ford Motor Misses by Two Cents

Today is another big day for Buy List earnings reports. Four of our stocks are due to report. Three come after the close, but Ford Motor (F) reported this morning.

It was a decent quarter for Ford. They doubled profits compared with one year ago. However, they missed estimates by two pennies per share.

While net income more than doubled to $1.9 billion from $835 million a year earlier, earnings of 45 cents a share, excluding some items, were below the 47-cent average of 18 analyst estimates. The miss sent Ford shares down 4 percent to $15.05 at 10:47 a.m. New York time after dropping as much as 5.6 percent, the most in two months.

“It looks like the classic story of someone missing EPS consensus and the market punishing them unfairly,” said David Whiston, an analyst at Morningstar Inc. in Chicago, who rates Ford equivalent of a buy. “They still had a really excellent quarter. The longer-term story at Ford is still very solid and very bright.”

Truck sales continue to do well for Ford.

The F-Series had its best third quarter in nine years, with an 8 percent increase to U.S. sales of 207,271. The trucks, which are the top-selling vehicle line in America, account for 90 percent of Ford’s global automotive profit, according to Morgan Stanley.

“As we look at 2016, we expect a strong year with the momentum we’ve built in 2015, and particularly in the second half of 2015,” Fields told analysts on a conference call today.

The cause for the earnings miss was entirely due to taxes, not business.

The earnings per share miss “is entirely due to a tax rate difference,” Chief Financial Officer Bob Shanks said. “We came right on in terms of operating results, but we had a 33 percent tax rate. The analysts on average had a 32 percent tax rate.”

The average tax rate jumped from 21 percent a year earlier when it was reduced by several special items. Ford had forecast a 34 percent rate, he said.

“Expectations were high and I think they delivered,” Whiston said. “The margins in North America were outstanding. It was an all-time record.”

Drilling down into the numbers, Ford’s business looks good.

The company maintained its full-year forecast for pretax profits of as much as $9.5 billion and said North American profit margin for the year would be 9.5 percent, at the top of its projected 8.5 percent to 9.5 percent range. In the third quarter, it was 11.3 percent, up from 7.1 percent a year earlier, Ford said.

“It’s an outstanding quarter,” Shanks told reporters at the company’s headquarters. “We’re on a really, really strong track towards the breakthrough year that we’ve described throughout this year.”

Shares of Ford are down about 3% to 4% this morning, but remember, that’s after gaining 20% in the previous month.

Posted by on October 27th, 2015 at 11:09 am


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