How Will Ford Motor (F) Stock Be Affected By 'Car Wars' Report?

NEW YORK (TheStreet) -- Ford Motor (F) is set to gain half a percentage point in U.S. market share by 2017 according to the annual 'Car Wars' report released by Bank of America Merrill Lynch (BAC) yesterday.

The U.S. automaker's market share is slated to grow to 16.2% by 2017 from 15.7% as of the end of 2013 as new vehicles hitting the market will be geared towards trucks and compact cars.

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The report also sees American Honda Motor Co (HMC) gaining half a percentage point in market share to 10.3% in 2017 from 9.8% as of the end of 2013.

The report forecasts the U.S. seasonally adjusted annual rate of vehicle sales to hit 18 million by 2018, up from the 17.4 million figure from 2000.

In separate news, Ford has reached a deal with German unions that will allow the company to continue to build its Ford Fiesta compact car in the country while reportedly saving the company $80 million a year.

Ford shares are up 0.3% to $17.06 in early market trading today.

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 revenue growth, 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:

  • F's revenue growth trails the industry average of 22.7%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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 significantly increased by 952.13% to $2,220.00 million when compared to the same quarter last year. In addition, FORD MOTOR CO has also vastly surpassed the industry average cash flow growth rate of 42.70%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • 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.
  • FORD MOTOR CO's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FORD MOTOR CO increased its bottom line by earning $1.75 versus $1.42 in the prior year. For the next year, the market is expecting a contraction of 24.0% in earnings ($1.33 versus $1.75).
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