
Will Ford (F) Stock Decline on Possible Added Costs from UAW Contract?
NEW YORK (TheStreet) -- Ford Motor Co. (F) - Get Report could see an increase in hourly labor costs if the latest four-year contract with the United Auto Workers union is ratified tonight.
Labor costs could increase to an average $60 an hour per auto worker by 2019 from the current average of $57, according to a study by an analyst at the Center of Automotive Research and a private consultant, Reuters reports.
Hourly wages would account for a little under half of total labor costs for union workers, which are still voting on ratifying the proposed contract.
As of Wednesday, three-quarters of total workers had voted on the contract, with 52% voting against it, according to union leaders, Reuters added.
After that number was released, 68% of workers at the Chicago Assembly Plant also rejected the proposed agreement.
The study also suggested hourly labor costs would increase for the other Detroit Three automakers: General Motors Co. (GM) and Fiat Chrysler Automobiles (FCAU).
GM would see its hourly labor costs rise to $60 from $55 if its contract with the UAW is ratified today as well.
Last month, Fiat Chrysler's union workers ratified a four-year contract that will increase hourly labor cost to $56 from $47 by 2019, Reuters noted.
Ford stock closed up 0.21% to $14.60 on Friday afternoon.
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.









