The Recovery Everyone Can See Coming: Ford Motor Company (F), Toyota Motor Corporation (ADR) (TM), Honda Motor Co Ltd (ADR)(HMC)

Page 1 of 2

I don’t know how much more data investors really need. I wrote about this last year, and the signs have only become clearer since then. The auto industry is undergoing a recovery that should last for several years. The pent up demand is huge, and the Great Recession cause many to rethink purchasing a new vehicle. However, just like death and taxes, some things are inevitable, and old cars don’t run forever. One company poised to benefit from this upcoming recovery is Ford Motor Company (NYSE:F).

Ford Motor Company (NYSE:F)How Many Tips Do You Need?
When I wrote my last post, Experian reported there were 245 million vehicles in the U.S. with an average age of 11 years. In addition, 52 million of these vehicles were 16 years or older.

Investors can also look at the railroad industry to get a tip on the direction of auto sales. In their last earnings report, CSX saw a 15% increase in auto shipments. Norfolk Southern also said auto shipments were up, and Union Pacific saw a rise of 14% in automotive volumes.

In addition, you have analysts’ projections for growth at each of the major automotive manufacturers. Analysts expect both Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC) to show big earnings growth as they reclaim lost market share. Specifically, Toyota is expected to grow earnings by over 40%, and Honda Motor Co Ltd (ADR)(NYSE:HMC)

Honda Motor Co Ltd (ADR)(NYSE:HMC) is expected to see near 30% growth. Ford Motor Company(NYSE:F) and General Motors Company (NYSE:GM) have been gaining ground on their foreign competitors, so they aren’t expected to see such explosive growth. However, with 12.5% growth expected from GM, and 10.5% growth at Ford, they won’t do too badly either.

The Strength Of The OvalCompany
If you look at Ford’s recent quarterly earnings, you can see that in three of their four geographic regions they performed very well. In North America and South America the company saw 12.76% and 10.71% revenue growth respectively. In Asia Pacific and Africa, the company’s 47.37% revenue growth was astounding. It’s no surprise the problem region was Europe, showing revenue down 21.69%.

Ford did mention something interesting, that I think bodes well for the future of the company in Europe. They said that last year, Europe only sold 13.5 million vehicles, which was the lowest since 1995. When a geography has a 17 year low in units sold, you can assume if they aren’t at the bottom of their cycle, they have to be pretty close. Automotive sales are cyclical in nature, so investors have to realize that buying when things are bleak is often the best way to profit.

There Is Always Room For Improvement
In addition, Ford has some opportunities to improve their performance even further. The company’s automotive operating margin of 3.8% compares favorably to most of their competition. This margin was good enough to beat out Toyota’s margin of 1.91% and Honda’s margin of 2.94%. However, General Motors Company (NYSE:GM) did better at 4.27%, and Ford had a wild variation in margin between different geographies.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!