Ford (F) Stock Falls as Labor Costs Climb
NEW YORK (TheStreet) -- Ford Motor Co. (F) - Get Report stock is declining 1% to $14.39 in mid-morning trading on Monday, after the automaker announced the results of a new labor agreement with the United Auto Workers union.
Labor costs will increase to less than 1.5% per year and Ford will pay $600 million in 2015 for workers' bonuses, the Dearborn, MI-based company announced on Monday.
The agreement, which was ratified on November 20, secures 8,500 U.S. jobs at manufacturing facilities, Ford said.
The new labor cost structure will narrow the labor cost gap between General MotorsCo. (GM) and Fiat Chrysler Automobiles (FCAU), Ford added.
"This agreement enables us to further strengthen our business and continue investing in manufacturing in the U.S.," Ford CEO Mark Fields said in a statement earlier this month. "At the same time, the agreement aligns our labor cost structure more closely with our competition and improves our manufacturing productivity and staffing flexibility."
TheStreet Ratings team rates FORD MOTOR CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate FORD MOTOR CO (F) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations, growth in earnings per share and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 128.6% when compared to the same quarter one year prior, rising from $835.00 million to $1,909.00 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.3%. Since the same quarter one year prior, revenues slightly increased by 9.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Net operating cash flow has increased to $6,455.00 million or 20.22% when compared to the same quarter last year. In addition, FORD MOTOR CO has also modestly surpassed the industry average cash flow growth rate of 12.30%.
- FORD MOTOR CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FORD MOTOR CO reported lower earnings of $0.78 versus $1.75 in the prior year. This year, the market expects an improvement in earnings ($1.63 versus $0.78).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Automobiles industry and the overall market, FORD MOTOR CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- You can view the full analysis from the report here: F
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.