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Why Ford Motor (F) Stock is Outperforming The broader Auto Sector?

Jon Phillip

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In 2019, most investors, who specialize in the automobile sector, have been almost completely occupied with the fate of electric car manufacturer Tesla (TSLA-Stock Info). The sliding sales and deepening losses had worried investors and sent the stock crashing at the beginning of the year.

It goes without saying that the attention Tesla got was disproportionate. This brings us to the point of Ford, one of the established giants of the global automobile industry. Amidst all the chaos, the Ford Motor Company (F-Stock Info)’s stock has proven to be an unlikely winner. In fact, it has managed to gain as much as 27% this year so far.

Sales And Profits Continue To Grow

Over the past decade, Ford had dropped from its highs following the financial crisis. In this regard, it needs to be noted that while its sales and profits continue to grow, Ford failed to rein in its expenses. In turn, it affected the company’s ability to fully take advantage of segments in which they were strong. Truck and SUV sales are two particularly glaring examples in this regard.

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Investors were fully aware of these problems. Eventually, the stock slumped, despite the fact that Ford had recorded record profits back in 2015. However, the company has recently overhauled its strategy completely. New CEO Jim Hackett’s leadership seems to have taken Ford into a new trajectory altogether.

Hackett has been extremely proactive with his plans on ‘redesigning’ the business of Ford. He has come up with a specific plan to turn the company around completely. More importantly, it seems that his efforts are taking an effect and it has been reflected in the company’s previous two earnings reports.

The new CEO has steered the company towards focusing more on SUVs and trucks since those vehicles generate higher margins and sales. On the other hand, investments on hatchbacks and sedans have been reduced significantly. This move has helped the company in helping the bottom-line without losing out much with regards to market share.

Global Restructuring

In addition to that, Ford has moved aggressively towards a global restructuring of its business as well. Significant restructuring is underway in the company’s businesses in South America and Europe.

Over the years, Ford had spent a lot of money on operations that did not bring a lot of money. In one of the world’s biggest automobile markets in China, the company’s operations have been abysmal but that is changing as well.

Ford has now installed a highly experienced management team in charge of its China business and the losses from the country have already been reduced somewhat. There is some way to go before the company to have completed its turnaround but the signs are good and the market has recognized that as well.

Next Article | How Can Auto Companies Benefit From The Growth In On-Demand Apps Like UberEATS, Postmates & More? Click Here

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Automotive

Should You Buy Tesla (TSLA) After The Recent Consolidation?

Jon Phillip

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tesla stock price

It has been a bit of an up and down year for Tesla Inc (TSLA Stock Report) so far. The electric car maker started the year off with a massive drop in deliveries. Then in the second quarter, it made a comeback by generating a larger amount of deliveries in its history.

In the same sense, TSLA stock price has been up and down as well due to a range of reasons. In such a situation, it is often difficult to properly gauge whether the company is going in the right direction or not. More importantly, it will be the best way of figuring out whether the stock is worth buying.

Can Tesla Deliver in 2019?

Now, as everyone knows, the company made a record number of deliveries in Q2 2019. Despite the year on year rise of 134%, the company’s revenues actually went down 11.9%. That is a significant contract and one that might not be entirely acceptable for most investors. That being said, Tesla has stated that the company is confident in their quest to bring down the unit cost of each car and that will eventually reflect on the revenues.

[Read More] Multi-Billion Dollar Markets Are Ready For A Shake-Up; 1 Stock Could Hold The Key

In addition to that, the company is well on its way to execute its strategy by starting with luxury electric cars and eventually producing lower-priced models meant for the mass market. That is a move that could prove to be a huge boost to Tesla in the long run.

What Does The Future Hold?

However, one of the biggest concerns for the company at this point in time is its debt load of more than $13 billion. Considering the fact it is around 33% of its actual market cap, it is only natural that most investors believe that the current valuations of Tesla are unrealistic. Over the coming months, the whole thing may become even tougher for the company as it seeks to grow further.

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Automotive

As Tesla (TSLA) Stock Price Consolidates, What Should You Watch?

Joe Samuel

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In the past few weeks, Tesla Inc. (NASDAQ:TSLA) stock price has been making headlines for various reasons. Currently, the electric vehicle maker is making headlines after its decision to reintroduce unlimited supercharging for owners of the Model S sedan and Model X cars.

Unlimited free supercharging for Model S and Model X

This is not the first time the company is offering free supercharging benefits and this shouldn’t be a big deal. However, for investors who are reading between the lines, this can be unsettling for Tesla stock price. Investors are still not sure what motivated the decision to bring back the free supercharging for life hardly a year after it was phased out.

[Special Report] On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market

It is expensive for the company to power cars of customers for life when it has been facing unprofitability issues. The company has been laying off employees and cutting costs to show that it can be profitable in the long-term. Following the announcement of Q2 earnings Tesla stock dipped 10% after the company announced a net loss of around $408 that was almost three times what Wall Street analysts had predicted on a per-share basis.

Free supercharge for life to boost sales of Model S and Model X cars

The return of free charging is a desperate move by Tesla as it looks to boost sales of the Model S and Model X vehicles. For months bears have argued that the low-margin Model 3 car is the reason there is low demand for these premium profitable models.

For instance, in Q2 Model X sales were down 40% while Model S registrations dropped 54% in California which by far is Tesla’s biggest market. On the other hand Model 3 sales doubled in the quarter. Although this might look like good news for the company it is nonetheless not if the low margin Model 3 is eating into the demand for higher-margin models. 

If the company at some point phased out free supercharging then it will be pulling forthcoming sales forward. That with disappearing tax credits may help in creating a future demand vacuum for Model X and Model S vehicles.

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Automotive

Auto Stock Prices In Jeopardy After Latest Earnings Reports From Ford & Tesla

Joe Samuel

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F stock price TSLA stock price

After disappointing earnings, both Ford stock price and Tesla stock price fall

The automobile industry has been through its fair share of troubles over the past few years, due to a range of factors. However, it cannot be denied that one company that has been going through a prolonged churn is Ford, one of the giants of the industry.

[Article] Can On-Demand Delivery Help Boost Autos In The Coming Quarters?

On the other hand, electric car manufacturing giant Tesla has had a rollercoaster ride for years now. That continues to be the case for the company. This week, both these companies released their Q2 2019 earnings and the results proved to be disappointing.

Ford Stock Price

Ford Motor Company (NYSE:F) released its earnings on Thursday. Unfortunately, the results proved to be a major disappointment for investors. In addition to that, the company’s projections for the full year also proved to be well short of expectations.

Back in April, the shares had attained the biggest gains in a decade after the carmaker beat expectations, but the second-quarter results have dented the stock considerably. The Ford stock price declined by as much as 7.45% following the results, which is the biggest single-day fall since January 17 and the next few days could prove to be crucial.

On the other hand, the earnings for the full year were projected to be in the range of $1.20 and $1.35 a share. Analysts had expected earnings of $1.40 a share.

Tesla Stock Price

On the other hand, electric car maker Tesla Inc (NASDAQ:TSLA) may have generated record deliveries. But the company’s losses widened and the resignation of co-founder J. B. Straubel didn’t help matters either. However, one of the bigger reasons behind the Tesla stock price tanking by as much as 14% on Thursday was the fact that CEO Elon Musk seemed to backpedal on his promise about turning a profit in the remaining quarters this year.

Although Musk did reiterate the company’s quest to turn a profit in the next two quarters, he seemed to stress more on the growth of volumes and enhancement of production capacity. Analysts believe the company needs to increase its margins if it wants to become a serious player in the industry.

Like This Article? Check Out: Special Delivery! On-Demand Tech Companies Hit Billion-Dollar Valuations; Here’s How Investors Can Capitalize In The Market

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