[ad_1]
Photograph of Sean Davis
Text size
Ford engine
(ticker: F) announced a first quarter adjusted profit of 44 cents per share for a $ 40.3 billion business figure. Both figures exceeded Wall Street estimates. After normal market hours, Ford shares rose 8.1% to $ 10.16.
This is good news for auto investors. The automotive sector has struggled recently.
Visteon
The stock (ticker: VC) fell 23% Thursday after management cut its earnings forecast for 2019.
3M
Shares (MMM) fell 13% after missing estimates of Wall Street consensus earnings, in part because of weak auto sales.
Ford, however, outperformed its auto peers in 2019. Ford's stock is up 25 percent year-to-date, more than the 13 percent gain
Dow Jones Industrial Average
and far better than the 13% gain in the Russell 3000 Auto & Auto Parts Index.
The story back: Falling sales in two major new vehicle markets – the United States and China – weaken sentiment in the auto sector.
The Russell 3000 Auto & Auto Parts Index exchanges for just 11.4 times the estimated earnings for 2019, a discount of 7% over its historical average and a 35% discount over the market more large. Data provider Edmunds expects car sales in the United States to fall by 3% to 16.8 million vehicles this year.
What's up: Ford derives most of its money from trucks, and the company said average prices for truck transactions were stable, despite new truck models from its competitors. This is encouraging news for Ford. Investors worry that prices will go down because of slowing car sales.
"This quarter has been a very good start to the year," said outgoing CFO Bob Shanks in the company's press release. "We are waiting for the first quarter [operating earnings] be the strongest of the year due to seasonal factors and significant launches of upcoming products. This, however, allows us to achieve better results than last year in 2019. "Shanks, who has been CFO for seven years, is replaced by Tim Stone in June.
Ford still loses money outside of North America just like last year, but losses are declining.
Ford's credit performance was also strong in the first quarter. The company announced operating profit of $ 801 million, an improvement of $ 160 million over the first quarter of last year. Ford's credit indicators are not showing any signs of late deterioration.
Look forward: The numbers reported should be enough to push Ford's stock higher on Friday. Other automakers, like
General Motors
(GM), could rise in sympathy. GM announces a profit next week.
Ford also spent $ 288 million in the first quarter to develop autonomous vehicles. All automakers are investing in new technologies such as autonomous cars and electric vehicles. Ford invested in starting the Rivian electric truck on Wednesday.
The company is scheduling its earnings conference call at 5:30 pm ET. Analysts will be asking many questions about the future of the auto sector and many of them will probably welcome the strong quarterly performance.
Write to Al Root at [email protected]
[ad_2]
Source link