FORD MOTOR CO. $11 (New York symbol F; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 3.7 billion; Market cap: $40.7 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.8%; TSINetwork Rating: Extra Risk; www.ford.com) is the secondlargest carmaker in the U.S. behind General Motors. In the latest quarter, Ford accounted for14.8% of the U.S. market, down from 16.3% a year earlier.
The company continues to see strong sales and earnings in North America (50% of sales) and Asia (19%). That’s offsetting weaker results in Europe (23%) and South America (8%).
In the three months ended September 30, 2012, Ford’s earnings rose 15.6%, to $1.6 billion from $1.4 billion a year earlier. Earnings per share rose 17.6%, to $0.40 from $0.34, on fewer shares outstanding.
The company’s sales volumes fell 1.3%, to 1.33 million vehicles from 1.35 million a year earlier. Revenue from Ford’s financing division, which lends money to car buyers, also declined 5.0%. These factors pushed down the company’s overall revenue by 3.0%, to $32.1 billion from $33.1 billion.
In response to the lower sales, Ford plans to close three of its European plants over the next two years. When these shutdowns are finished, they should save the company $450 million to $500 million annually.
These savings should help Ford offset the impact of rising demand for less-profitable small cars. Its upcoming shift to just five vehicle platforms will also cut its costs and speed up the launch of new models.
The stock trades at 8.2 times the $1.34 a share that Ford will probably earn in 2012. The $0.20 dividend yields 1.8%.
Ford is a buy.
