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Bear of the Day: Ford Motor Company (F)

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Founded by Henry Ford in 1903 and headquartered in Dearborn, MI, Ford Motor Company (F - Free Report) is an automotive, financial services and mobility company with operations in the U.S. and across the world.

The company operates through the following segments: Automotive and Financial Services.  It manufactures and distributes automobiles in 200 markets across six continents.

Disappointing Quarterly Results

Ford reported Q2 adjusted earnings of 27 cents per share, short of the Zacks Consensus Estimate of 31 cents per share. Adjusted earnings in the prior-year quarter were 56 cents per share.

Higher commodity costs, mainly due to steel and aluminum tariffs hurt results. Rising challenges faced by the company in the China market and the North American production disruption also impacted results.

“This quarter we achieved solid results in North America, offset in part by unexpected challenges with our overseas operations and headwinds in the business environment,” said the CEO.

The company also lowered its guidance for the year and announced a restructuring plan.

“The team is making the hard decisions to raise the returns of underperforming assets where we can via fitness and alternative business models, and we will disposition the rest,” said the CFO.

Estimates Slashed

Analysts have slashed their estimates significantly after lackluster results. Zacks Consensus Estimates for the current and next year are down to $1.38 per share and $1.39 per share respectively, down from $1.54 and $1.56, before the results.

Ford Motor Company Price and EPS Surprise

Ford Motor Company Price and EPS Surprise | Ford Motor Company Quote

 

The Bottom Line

Auto sales slowed down in July with higher interest rates and rising gas prices. Tariffs are also hurting automakers’ profits.

Ford shares are down more than 20% this year but with a Zacks Rank #5 (Strong Sell), a rebound doesn’t appear likely any time soon.

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