The changing
trends in the industry and the shift towards trucks and SUVs have led Ford to prune
its portfolio and discontinue certain unprofitable models. The company
announced a major restructuring in Europe that saw several factory closures and
job cuts. Cost savings from restructuring activities are likely to benefit
earnings during the quarter.
Ford had to
recall a couple of its vehicle models during the year due to various glitches. These
recalls are likely to result in higher costs and take a toll on the company’s
performance. On a positive note, Ford has partnered with Volkswagen AG for the
development of electric and autonomous vehicles. As part of this alliance,
Volkswagen will invest $2.6 billion in Ford’s self-driving unit Argo AI.
As the automobile
industry moves towards electric and self-driving vehicles, Ford’s investments
in this area can prove beneficial to the company going forward.
In the first quarter of 2019, Ford beat market estimates for revenue and earnings. Despite falling nearly 4% year-over-year to $40.3 billion, revenue came ahead of forecasts. Adjusted EPS grew 2% to $0.44. Revenue in the Automotive segment dropped 5%.
Ford’s shares have gained 28% so far this year and 5% over the past three months. Based on data from TipRanks, Ford has a 12-month average price target of $11.77.