Shares of Ford Motor Co. (F, Financial) tumbled more than 9% on Thursday following its warning that second-quarter production may decline from the first quarter due to global chip shortages.
For the quarter ending March 31, the Dearborn, Michigan-based vehicle manufacturer reported net income of $3.262 billion, or 81 cents in diluted earnings per share, compared with net loss of $1.993 billion, or 50 cents in diluted loss per share, in the prior-year quarter.
Company warns of production shortages for the second quarter and beyond
Ford Chief Financial Officer John Lawler said in the company's Wednesday press release that the semiconductor chip shortages will worsen before the situation improves, adding that the chip shortages are expected to bottom out during the second quarter. Despite this, the company mentioned in its quarterly report filing on Thursday that Renesas Electric Corp. (TSE:6723, Financial), a key supplier of semiconductors for the automobile industry, suffered in March due to a significant fire at the Japanese company's Naka factory. While the semiconductor company said it expects recovery by July, Ford warned that the automotive semiconductor shortage may not be resolved until 2022.
Ford further warned that the semiconductor shortages may result in a 50% reduction in vehicle production for the second quarter and a 10% reduction in production for the second half of 2021.
Stock tumbles on production shortage warning
Shares of Ford traded at an intraday low of $11.14, down approximately 10.37% from Wednesday's close of $12.43. Despite this, the stock remains significantly overvalued based on Thursday's price-to-GF Value ratio of 1.45.
GuruFocus ranks Ford's financial strength 3 out of 10 on several warning signs, which include a weak Altman Z-score of 0.79 and debt ratios that underperform more than 90% of global competitors.
Gurus with large holdings in Ford include Jim Simons' Renaissance Technologies, Pioneer Investments (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio)'s GMO.
Disclosure: No positions.
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