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Will Ford Be Able to Sustain Its Impressive Run?

August 29, 2014 | About:



Automaker Ford (F) released impressive results for the second quarter of fiscal 2014. The organization saw great change in revenue, and pretax profits were also fantastic. Administration is content with the performance, as it was the 20th consecutive profitable quarter for the organization. With outstanding results in North America and the Asia-Pacific area, Ford is looking dead set to convey better results later on. This gives us a chance to ask, what does Ford have in its strategic approach for the future that will help it increase its piece of the overall industry?

Monetary performance and strategies

Ford's financials were great with its quarterly pretax profit timing $2.6 billion. This development was impressive and was $44 million more than last year's same quarter. Since Ford is seeing development in markets of America, Asia-Pacific and Europe, its net income is seeing great development and the organization posted net income of $1.3 billion. Ford is relying on its strategies and is expecting better results later on. It is expecting its pretax profit to extend between $7 million to $8 million when it launches an extensive variety of products within a brief period of time.

It is energizing to see Ford's efforts to add a piece of the pie. Despite the fact that it struggled in the past and was not all that impressive in the stock market, the automaker justified its turnaround efforts, having posted some great numbers on the board. The One Ford arrangement is still in operation, and the organization is seeing some great yields from the arrangement. It is focusing on every one of the four elements of the arrangement and expecting better synergies from it in coming days.

Creative moves

Given the stiff rivalry in the car industry, Ford is making wise innovations in its products to keep a strict check over its rivals' moves and to be capable against them. To attain this stiff edge in the business Ford is passionate about item incredibleness and is focused on seeing item change by advancement and accumulating new products from its item pipeline. With such efforts focused on strengthening the item portfolio, Ford is dedicated to increasing the value of its shareholders' riches demonstrating development by the organization.

Making headway, Ford is seeing positive cash stream from the car segment. The organization is seeing great development in this segment as it is seeing great sales for its vehicles in some potential markets such as North America and Asia-Pacific. Ford is actually expecting great sales in China as well.

European improvements

Ford was not expecting much from the European market as the business sector was declining and was not responsive because of stiff government policies. With the high interest rates overall in the area, it scared numerous customers far from purchasing vehicles. Anyhow the European business sector is showing positive signs. It might be seen in the last quarter's sales report where Ford figured out how to hit profit in Europe in the second quarter after three years.

This was a decent sign for Ford as the organization was concerned because of slumping sales in Russia. Ford is also pleased with its position in the business against its adversary General Motors (GM) which is taking a topsy-turvy ride due auto review by it because of defective ignition switches. This scared the investors far from GM.


Ford is also dealing with a share repurchase program which it embraced in the past worth 116 million shares. This is a strategic move by the organization to offset 3% dilutive impact of potential convertible obligation and stock-based conversions. For fiscal 2015 Ford will focus on the South American weakness and will be depending on the new item launches to be profitable in the future.

With a trailing P/E of 11.10, Ford looks reasonable. The CAGR of 12.23% shows that Ford may justify its efforts in tapping the developing markets. Besides this, Ford is seeing great signs in Europe, which are required to enhance later on. All these facts show that Ford is a decent pick as of now.

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