Ford hurt by Europe

The car-manufacturer will reveal its first-quarter numbers on Tuesday 28 April, and the European division will still be a problem for the automaker.


The North American unit operation of Ford is the driving force behind it, as its businesses in Europe and South America remain a burden for the company. Full-year earnings for 2014 dropped by 56%, and even though the American business was its best performer it still registered a 22% drop in annual profit.

The sanctions imposed on Russia for its conflict with Ukraine is trickling down to their economy and it is impacting Ford’s European sales. Moscow is still left out in the cold and relations between the Kremlin and the West have not improved. Ford previously tipped Russia to be its biggest market within Europe before the conflict in Ukraine, and now it sales forecast for the country has halved, and the nation will remain a ‘headwind’.

Ford revealed a loss of $1.2 billion for its South American business, as a number of factors played their part in the massive loss. The slowdown in the Brazilian economy was the most expected of all the issues and caused the least headaches. The collapse of the Venezuelan bolivar added to Ford’s problems, as did the import restrictions imposed by the Argentinian government. Due to the severity of the decline in the Venezuelan currency, Ford will remove the nation’s operation from their financial reporting system.

When Ford announces its first-quarter numbers, the consensus is for revenue of $34.2 billion and earnings per share (EPS) of 26 cents. Ford’s fourth-quarter numbers were well received, and revenue came in at $33.8 billion and the EPS was 26 cents, and the market was anticipating $34.5 billion and 22 cents respectively. The firm will reports its full-year numbers on January 2016, and the market is expecting revenue of $143 billion, and EPS of $1.58. These estimates represent a 6% rise in revenue and a 36% jump in EPS.

Bob Shanks, the company’s CFO, described 2014 as ‘challenging’ but holds a bright outlook for this year and foresees 2015 as being ‘very strong’ for Ford. Production in the US was hit last year due to restructuring of two plants to facilitate the manufacturing of the new F-series pick-up truck, and production will be at full capacity later this year.

Equity analysts are bullish on Ford: out of 26 recommendation, ten are buys, 15 are holds, and only one is a sell. The average target price is $17, which is 7.5% above the current market price. Equity analysts hold an even more bullish outlook for General Motors, and out of the 24 ratings, 14 are buys, eight are holds, and two are sells. The average target price is $42.33, which is 14% above the current price.

Since the fourth-quarter figures were posted in January, the level of short interest on Ford has dropped by 2.7%.

The stock is trading near the 200-day moving average at $15.84, a drop below this metric will turn it into resistance and the support at $15 will be the downside target. A move above the 200-daily moving average will bring the resistance in the $16.60 region into play, and a move through that mark will make $17 the next target.

Ford is available for extended hours trading

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.