Ford Motor Company (NYSE:F) plans to reports its 3Q2016 earnings in coming period, and shareholders and investors alike will be expecting that they don’t get a recurrence of how the stock price performed when 2Q2016 earnings were released last July. With the firm trading close to $12 a share, the experts see both “against” and “for” arguments at present. Clearly, the big calling card for stockholders to buy at the moment is the dividend yield of 5% or more, which is more when included the special dividend paid out in January 2016.
The experts, believe a lot of the interpretation related to the whole matter of a cyclical top in automobile sales in the U.S. has possibly been priced already. This is vital because if 3Q2016 disappoints shareholders either from a guidance standpoint or from an earnings point of view, then the market shouldn’t witness as much decline in the stock as seen in 2Q.
Already this fiscal, the market has witnessed 2016 pre-tax profit guidance declining to $10.2 billion from $10.8 billion. Primarily, this was due to higher investment on new models and a recall of more than 2 million vehicles following manufacturing errors. Seeing from an investment perspective, temporary headwinds are fine as they generally do not last for long.
September SARS results shows that if they do indeed top in auto sales in the U.S., the rate of the decline is modest. The SARS figure came in at 17.74 million, which is elevated compared to September performance and the summer months. Yet, Ford has witnessed demand for its ‘F-series’ trucks dropping, so it has stopped production at different plants for now. This product group is where the firm makes big part of its operating margin, and therefore future lower sales is certainly disturbing from a margin stance.
Considering this, automobile producers are all too habituated to trading in down markets. If Ford can beat peers by being super-productive, there exists no reason why the company can’t fetch market share in the truck segments it competes in.