Will Ford (F) Stock React to Shortening Summer Shutdown to Meet Demand?

NEW YORK (TheStreet) -- Shares of Ford Motor Co  (F) were lower by 0.39% to $15.30 in early market trading Tuesday, after the automaker announced that it will reduce summer shutdowns at 16 North American factories in order to produce about 40,000 additional vehicles.

Ford plans to meet growing demand for its sport-utility vehicles and the new aluminum-bodied F-150 pickup by cutting the second half of a planned two-week break that starts June 29, Bloomberg reports.

The company is responding to heightened demand for bigger vehicles amid relatively low gasoline prices, Bloomberg noted.

"To meet surging customer demand for our top-selling trucks and utilities, we are continuing to run our North American facilities during the traditional two-week summer shutdown," Ford vice president of North American manufacturing Bruce Hettle said in the statement.

Dearborn, Mich.-based Ford is a manufacturer of automobiles, and is engaged in other businesses, including financing vehicles.

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 several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its generally strong cash flow from operations. 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:

  • Net operating cash flow has slightly increased to $2,413.00 million or 8.69% 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 23.13%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.3%. Since the same quarter one year prior, revenues slightly dropped by 5.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • FORD MOTOR CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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 $0.78 versus $1.75 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.78).
  • The gross profit margin for FORD MOTOR CO is rather low; currently it is at 18.58%. Regardless of F's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.72% trails the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market on the basis of return on equity, FORD MOTOR CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: F Ratings Report

More from Markets

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Oil Slumps, Gas Spikes Ahead of Holiday Weekend; Assessing the Chipmakers--ICYMI

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Week Ahead: Wall Street Looks to Jobs Report as North Korea Meeting Less Certain

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Dow and S&P 500 Decline, Energy Shares Fall as U.S. Crude Oil Slides 4%

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Replay: Jim Cramer on the Markets, 10-Year Yield, Oil Prices and Foot Locker

Video: You Could Live in a Ritz-Carlton or St. Regis Home

Video: You Could Live in a Ritz-Carlton or St. Regis Home