Will Ford (F) Stock Skid on UAW Contract Ratification Concerns?

Ford (F) UAW workers may be close to rejecting a four year labor contract.
By Amanda Gomez ,

NEW YORK (TheStreet) -- Ford Motor Co. (F) - Get Report may not see its latest four year labor contract with the United Auto Workers union ratified, according to early results, Reuters reports.

About 65.5% of 7,408 workers at two large Louisville, KY plants have voted against the proposal.

Overall, about 53,000 Ford union workers are voting on the contract until Thursday, with about half rejecting it so far, Reuters noted.

Workers are concerned that the new contract does not offer enough to justify the sacrifices that were made when Ford took a financial hit a few years ago.

In 2006, workers gave up a pay increase, while in 2009 they did not take a cost-of-living pay hike, Scott Houldieson, VP of a local union in Chicago, told Reuters.

"UAW members gave up a lot during the four- to five-year downturn," Houldieson added.

Ford stock is gaining 1.06% to $14.30 in midday trading on Wednesday.

Separately, 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 multiple 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 revenue growth, increase in net income, 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 generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 6.1%. 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.
  • 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.
  • Net operating cash flow has increased to $6,455.00 million or 20.22% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.20%.
  • 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).
  • After a year of stock price fluctuations, the net result is that F's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • 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.

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