Why Ford (F) Is Up Today

NEW YORK (TheStreet) -- Ford  (F) was rising 0.41% to $15.77 on Tuesday after the automaker announced better-than-expected fourth quarter profits that beat analysts' estimates.

Ford's net income in the fourth quarter rose to $3 billion, or 74 cents a share, from $1.6 billion, or 40 cents a share, from the same period a year earlier. That 2013 figure included a $1.6 billion gain from the addition of deferred tax assets to the balance sheet, along with charges of $311 million for last year's pension buyouts and European layoffs.

Ford took in 31 cents a share in the quarter, which was three cents more than predictions from analysts polled by Thomson Reuters I/B/E/S. Revenue also rose 4% to $37.6 billion, which surpassed analysts' expectations of $35.17 billion. For the fiscal year 2013, Ford pulled in a profit of $7.2 billion, or $1.76 per share.

The U.S. automaker had previously warned that profits would decrease in 2014 as the company releases a record 23 vehicles and builds seven new plants around the world.

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 some important positives, 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, attractive valuation levels, good cash flow from operations, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • The revenue growth came in higher than the industry average of 14.2%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $3,840.00 million or 12.05% when compared to the same quarter last year. Despite an increase in cash flow, FORD MOTOR CO's cash flow growth rate is still lower than the industry average growth rate of 28.51%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • FORD MOTOR CO's earnings per share declined by 24.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FORD MOTOR CO reported lower earnings of $1.42 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.42).
  • You can view the full analysis from the report here: F Ratings Report

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