Bear of the Day: Ford Motor Company (F)

Ford Company OverviewZacks Rank #5 (Strong Sell) stock Ford Motor Company (F), established by Henry Ford in 1903, is an American automotive manufacturer headquartered in Dearborn, Michigan. Being one of the world’s leading automakers, Ford provides a vast product portfolio of cars, trucks, SUVs, and commercial vehicles, including its luxury Lincoln brand and electric vehicles (EVs).Ford Earnings Miss Amid EV Weakness, CompetitionCheckered EPS Surprise HistoryFord’s recent earnings history has been checkered, with some quarters beating, and some missing badly. Presently, the July quarter is in control. F shares stumbled more than 18% on volume turnover nearly four times the norm, after the automaker missed Zacks Consensus estimates by a wide margin of 26.56%. Conversely, fellow legacy automaker General Motors (GM) has beaten Wall Street’s earnings estimates.Image Source: Zacks Investment ResearchEV Market Slows, Competition is FierceAn integral reason Ford missed earnings estimates is weakness in its EV segment. Ford has been forced to scale down its EV production amid slowing EV demand. Meanwhile, though EV demand will likely pick up eventually, Tesla (TSLA) dominates the market by a significant margin. Further, many customers who want to avoid diving dive straight into an EV are opting for hybrids from Toyota Motors (TM), leaving Ford out in the cold.Ford’s relative weakness is illustrated not only in its faltering fundamentals but also in its share price. Tesla and GM are up 74.80% and 18.90% over the past year, respectively, while Ford lags far behind, down 29%.Image Source: Zacks Investment ResearchFord Faces Quality Issues Ford’s struggle to manage warranty expenses has been another sore spot for the automaker. Quality issues in several models from 2016-2021 have led to an $800 million increase in warranty costs. Though management intends to address these issues, they have communicated to shareholders that the problems may not be resolved for more than a year, at the very least. In other words, the warranty issues will cause a bearish overhang in the stock for the foreseeable future.Tariff ConcernsFord CEO voiced concerns about tariffs on CNBC yesterday, saying,“So far, what we’re seeing is a lot of cost and a lot of chaos.If you look at the tariffs, let’s be real honest, long term, a 25% tariff across the Mexico and Canadian border will blow a hole in the US auto industry that we have never seen.”Bottom LineDespite its storied history, Ford Motor faces significant headwinds, including missed earnings, slowing EV demand, and increased competition from Tesla and other automakers. Additionally, persistent quality issues will likely weigh on the stock over the coming months.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F): Free Stock Analysis Report Toyota Motor Corporation (TM): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks