Ford driving higher

The car-maker will announce will its third-quarter numbers on 27 October, and the stock has bounced back since Black Friday.

Ford logo
Source: Bloomberg

The automobile giant had a very strong second-quarter and is optimistic in its outlook for the rest of the year and 2016. The car-marker hasn’t enjoyed the smoothest run in the past few years, as the whole sector is under pressure, and Ford had problems with the F-150 – which needed reworking – which caused production delays. Despite the setbacks, Ford seems to be heading in the right direction and second-quarter profits climbed by 44%, and the CEO Mark Fields stated that the firm will ‘deliver a breakthrough’ year.

Ford’s most successful division in North America and Asia is performing well now, but in future quarters we could see the slowdown in the Far East weighing on its sales. The problems surrounding the F-150 have been overcome, and production levels are at full speed, and it is now one of the most popular pickup trucks in the US. F-150 sales have lagged in previous quarters – supply was the issue, not demand – although it is a concern some Ford dealerships have been offering generous discounts on the top-end models.

When Ford reveals its third-quarter figures, the market is expecting revenue of $35.08 billion and earnings per share of 46 cents. The second-quarter revenue and EPS came in at $35.1 billion and 47 cents respectively. Ford will announce its full-year numbers in January 2016, and dealers are anticipating revenue of $137 billion and EPS of $1.68, which represents a 1.5% jump in revenue and a 44% increase in EPS.

Equity markets are bullish on Ford, and out of the 24 recommendations, 11 are buys, 12 are holds, and one is a sell. The average target price is $17.63, which is 14% above the current price. Investment banks are more bullish on General Motors, and out of the 22 recommendations, 12 are buys, and ten are holds.  

Since Ford reported its second-quarter numbers, the number of short positions being taken out fell by 19%. The short interest on the stock is at its lowest level in five months.

Ford’s share price has been driving higher since late August, and $16.50 is the target, and a move through it would bring the $18 region into sight. Should the stock drift lower the next level of support will be $13.

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