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Ford’s Opportunity in China

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Asia Pacific Africa “Ford’s strategy in Asia Pacific Africa is to grow aggressively with an expanding portfolio of global One Ford products with manufacturing hubs in China, India and ASEAN… …In the fourth quarter, wholesale volume was up 29 percent from a year ago, and net revenue, which excludes the company’s China joint ventures, grew 16 percent. Ford’s wholesale volume in China was up 45 percent in the fourth quarter and about 50 percent for the full year. The higher volume in the region mainly reflects improved market share. Higher industry volume, increasing from a SAAR of 33.1 million units to 38.1 million units and favorable changes in dealer stocks also contributed. Higher revenue primarily reflects favorable volume and mix. … Read more

Ford’s Pension Under-fundedness Under Control; Magnitude of Stock Price Multiple Discount Unwarranted Even After Considering Operational (cyclicality) and Financial (Ford Motor Credit) Risks

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Executive Summary: Ford has been a solid performer in the portfolio of the Best Ideas Newsletter. Though 2014 may not be its best year, we think the best times at the company are still ahead of it. A sub-10 trailing earnings multiple is too harsh, even after considering operational (cyclicality) and financial (Ford Motor Credit) risks. We couldn’t be happier with Ford’s (F) performance during 2013, results released January 28. Full-year 2013 pre-tax profit of $8.6 billion advanced more than $600 million from the mark in the same period a year ago and represented one of Ford’s best years ever. The company’s full-year earnings per share of $1.62, which jumped $0.21 from the same period last year, implies a trailing … Read more

Throw December Auto Sales Numbers Away; December Ice Storms and a Late Thanksgiving Holiday to Blame

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The excuses for the subpar selling performance at automakers in December (up just 0.3%) were many: the frigid ice and snow storms that scared customers away; a late Thanksgiving holiday that stole sales from the month; and a shortened holiday shopping season that left consumers scrambling to buy holiday gifts for family and friends, as opposed to spending time car shopping. Though the impact of each contributing factor is difficult to measure, we think the combination of these items was the main culprit for disappointing December auto sales, not that the consumer has decided to forgo car purchases and that the upswing in auto sales has come to an abrupt halt. Some caution is starting to creep into the market—see … Read more

FedEx, Ford and Facebook Topping News

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On Wednesday, FedEx (FDX) reported slightly lower-than-expected bottom-line performance in its fiscal second-quarter results. Revenue advanced 3% during the quarter, while reported operating income leapt 15% thanks to roughly 80 basis points of operating-margin improvement. Adjusted for the effects of Hurricane Sandy, however, year-over-year performance wasn’t that great. The firm’s quarterly earnings per share mark of $1.57 compares to an adjusted measure of $1.50, or a 4.7% increase, which itself was augmented by its share-repurchase program. Free cash flow was negative during the six months ended November 30, 2013, consistent with the cash use during the prior-year period. The company experienced improved yield and cost management (and materially better operating margin performance) at FedEx Express (its largest operating segment), but … Read more

Ford Shines Bright in November; Potential Channel Stuffing By GM; Toyota Suggests Industry Sales at Fastest Pace Since 2007; Nissan Sets November Record; Honda’s Second-Best November Performance

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On Tuesday, Best Ideas portfolio holding Ford (F) put up its best November US auto sales performance in almost a decade. US sales at the automaker advanced 7% in the month, exceeding the mid-5% consensus forecast, while retail sales were up 9% for the period. The F-Series topped 60,000 sales for the seventh consecutive month (it sold 65,501 F-Series trucks in the month, up 16% on a year-over-year basis), and passenger car strength was led by Fusion and Fiesta sales, which jumped 51% and 26%, respectively. Total passenger car sales achieved the best sales result since 2002. November was a month to remember for Ford!  The automaker announced that it would build 770,000 vehicles in the first quarter of 2014 … Read more

Ford Once Again Leads the Pack with September Sales

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September auto sales once again revealed a strong US auto market that continues to capitalize on pent-up demand. Though the seasonally adjusted annual rate (SAAR) fell from its 16 million-unit rate in August to 15.3 million units in September, the sequential decline seems mostly attributable to a timing shift (there were two fewer selling days in September than a year ago), and we’re not reading too much into the perceived modest industry-wide slowdown. As we can see from the chart below, there is plenty of volatility in the numbers from month to month, something that investors should continue to expect. Source: NADA Ford Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) exceeded consensus estimates calling for flat … Read more

US Auto Market Shows Resolve in August; Ford Remains Our Best Idea; C-Max Outselling Tesla’s Model S

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During the past two years, we’ve never wavered on our bullish take on the domestic automotive sector—pent-up demand, inexpensive credit, and a rapidly age fleet have all combined to propel a robust automotive comeback. August was no different, with the SAAR topping 16.1 million units during the month. Let’s take a look at how some of the auto makers performed. Ford Best Ideas Newsletter portfolio holding Ford (click ticker for report: ) posted fabulous August sales results as unit sales surged 12.2% year-over-year to 221,270 units. Retail sales were up 20% year-over-year, and Ford could hardly produce enough vehicles to meet demand, adding 1,400 workers at its Flat Rock Assembly. F-Series sales continued to lead the way, with unit sales … Read more

Ford Paces US Auto Sales in June

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With an estimated SAAR of 15.7 million units during June, the US auto market continues to surge back to relevancy. Let’s take a look at the major players and their respective results. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) continues to execute at an exceptionally high level. Unit sales jumped 13% year-over-year to 235,643 units. With the housing recovery in full gear, pickup sales have really accelerated, as F-Series sales surged 24% year-over-year to 68,009 units. Heavy truck sales increased 31% year-over-year, but only accounted for 726 units. Car sales were also fantastic, with sales increasing 13% year-over-year. Sales of the Fiesta more than doubled, while Focus sales jumped 9% and Taurus sales surged 15%. Fusion … Read more

The US Auto Recovery Is Unshakeable

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As the housing market recovery in the US appears more sustainable, US auto sales continue to gain steam. Low-end luxury is performing exceptionally well, as is the pickup segment—a likely result of the housing recovery. Let’s take a look at results from the industry. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) posted a spectacular May, exceeding consensus estimates with unit sales surging 14% year-over-year to 246,585. As we hit home in our recent piece about the US housing recovery, pickup sales are driving a large portion of Ford’s gains. In fact, F-Series unit sales grew 31% year-over-year to 71,604 units! Other cars posting large sales included the Escape, up 26% year-over-year, the Fusion, up 10% year-over-year, and … Read more

March Auto Roundup

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March was another strong month of auto sales in the United States. The SAAR for the month of March came in at 15.27 million units, up from 14.14 million units in March of 2012. Let’s take a look at the results by OEM. Ford Best Ideas Newsletter holding Ford (click ticker for report: ) posted unit sales growth of 6%, driven by utilities (up 14%) and trucks (up 6%). Car sales were flat during the month, though we saw a solid increase of 6% for the redesigned Fusion, and we saw Police Interceptor sales ramp significantly with sales coming in at just under 1,000 units. Consumers flocked away from crossovers, dumping the Edge (down 13%) and the Flex (down 35%), … Read more