Here's what to expect from Ford Thursday

The automaker is set to release its third-quarter report. Investors will be watching the business in Europe and India closely.

By Benzinga Oct 23, 2013 2:06PM

Credit: © Ford Motor Company
Caption: Ford F-250 Super Duty pickup truckBy Nelson Hem


Ford (F), which saw record sales of its F-150 trucks in August and September, is scheduled to report its third-quarter 2013 results Thursday before the markets open.


Investors will be looking to see how much of a drag on revenue and income Europe continues to be now that the continent has shown signs of economic revival. The iconic automaker also has said it wants to increase its market share in India and to reduce the number of its suppliers by 40 percent.


Expectations

Analysts on average predict that Ford will report that its revenue for the quarter increased about 13 percent year-over-year to $34.18 billion. Earnings of 37 cents per share are also in the consensus forecast. That would be down from a reported profit of 40 cents per share in the comparable period of last year.


Note that the consensus earnings per share (EPS) estimate has ticked up by a penny in the past 60 days. And Ford topped consensus EPS estimates in the previous four quarters by double-digit percentages. The beat in the second quarter was by more than 21 percent.


In the second quarter, Ford saw its strongest results in North America and the Asia Pacific Africa region. The net loss and negative operating margin in Europe were improved from the same period of the previous year. The share price retreated less than three percent in the week following the second-quarter report.


Looking ahead to the current quarter, the forecast currently calls for year-over-year growth of both EPS and revenues. That consensus EPS estimate also has risen by a penny in the past 60 days. The full-year forecast has EPS up about nine percent and revenue more than 110 percent higher.


The company

Ford Motor Co. builds and distributes vehicles primarily under the Ford and Lincoln brand names. The company operates through two sectors: automotive and financial services.


The company was founded in 1903, and its headquarters are in Dearborn, Mich. Ford is a component of the S&P 500, and it now has a market capitalization of more than $69 billion. Alan Mulally has been CEO and president of the company since Sept. 1, 2006.


Competitors include General Motors (GE) and Toyota (TM). The former is expected to post a flat quarterly profit from a year ago on a 5 percent rise in sales later this week. The latter reported strong results in its most recent report and raised its full fiscal year guidance.


During the three months that ended in September, Ford unveiled its Mid-Decade Plan, started producing its Fusion in the United States, announced some senior management changes and saw rumors that CEO Mulally might depart to take up the reins at Microsoft (MSFT). (Microsoft owns and publishes Top Stocks, an MSN Money site.)


Performance

Ford has a long-term earnings per share growth forecast of about 15 percent and a price-to-earnings (P/E) ratio lower than the industry average. Its operating margin is also lower than the industry average, but it has a return on equity of almost 34 percent. The dividend yield is near 2.3 percent.


The number of Ford shares sold short, as of the Sept. 30 settlement date, represented less than 2 percent of the total float. It would take about two days to close out all of the short positions.


The consensus recommendation of analysts surveyed by Thomson/First Call who follow the stock has been to buy shares for the past three months. The analysts' mean price target, or where they expect the stock to go, is about 8 percent higher than the current share price. Shares have not seen that level since 2001.


Shares have traded mostly between $16 and $17.50 since the beginning of July. The share price is more than 32 percent higher year-to-date, and above the 50-day and 200-day moving averages. Over the past six months, Ford has outperformed not only the competitors mentioned above, but also the S&P 500.


At the time of this writing, the author had no position in the mentioned equities.


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