Ford Motor Company (F): Growing Domestic Sales Faster

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Ford Motor Company (F), General Motors Company (GM): These Automotive Companies Inspire the Best Brand LoyaltyShares of Ford Motor Company (NYSE:F) have been stuck in neutral since hitting a 52-week high at the beginning of the year. Despite all the progress the company has made increasing its market share in the United States as it begins to tackle growing opportunities in emerging market, shareowners have been stuck with a stock that has underperformed the S&P 500 in 2013.

At some point the market will catch up to the story Ford Motor Company (NYSE:F) is telling, and long-term investors ought to be rewarded. For those looking to invest, now marks a good opportunity. Soon enough shares will break through their current resistance and shift into gear.

Growing domestic sales faster

In April, Ford Motor Company (NYSE:F) saw domestic sales increase 18% for the month compared to 2012. That’s better than the 17% analysts expected, and much better than its Detroit counterparts General Motors Company (NYSE:GM) and Chrysler, which posted 11% sales gains. Toyota Motor Corporation (ADR) (NYSE:TM) saw sales fall 1.1% during the month.

As a result, Ford Motor Company (NYSE:F)’s U.S. market share has climbed to 16.3% in 2013, compared to 15.5% last year. And while U.S. truck makers are all gaining share as the housing market recovers, Ford has outperformed General Motors Company (NYSE:GM)’s and Chrysler’s gains combined.

Meanwhile, Toyota Motor Corporation (ADR) (NYSE:TM) has actually seen a very slight contraction of 0.1% in its U.S. market share. Investors aren’t deterred, however, as the company is able to capitalize on the weakened Yen to improve its margins on U.S. sales. With the Yen continuing to weaken, Toyota Motor Corporation (ADR) (NYSE:TM) has the option of becoming more aggressive with its pricing, which could put some pressure on the big 3 in Detroit.

Chinese sales ain’t bad either

Ford Motor Company (NYSE:F) is aggressively expanding in China. It’s quickly expanding its operations throughout the country, recently opening assembly plants in Hangzhou and Chongqing. It has further expansion plans, which include investing $6 billion annually in the region and hiring 1200 new employees by 2015.

The company’s Focus model has been very popular in 2013 with registrations increasing 51% in the country during the first quarter. It recently released the Kuga SUV, which sold 10,000 units in its first two months, and plans on releasing 15 new models by 2015.

As a result of all its efforts in the region, Ford Motor Company (NYSE:F) sales improved a whopping 54% in the first quarter, and 65% last month.

General Motors Company (NYSE:GM), for its part, has done well in the region as well. Last month, sales improved 12.6%, and the company recorded its second highest monthly sales total ever in the country. Despite Ford Motor Company (NYSE:F)’s dramatic sales growth this year, General Motors Company (NYSE:GM) still outsells Ford by a 5-to-1 margin in China.

Japanese automakers continue to suffer in China due to the backlash from last year’s territorial dispute and subsequent boycott on Japanese goods. Both Toyota Motor Corporation (ADR) (NYSE:TM) and Honda sales are down year-to-date, and Ford Motor Company (NYSE:F) appears to be picking up on their lost sales.

Earnings potential

As Ford Motor Company (NYSE:F) continues to take market share in the U.S. and China, it has fantastic potential to grow its earnings. Analysts expect those earnings to be flat for this year and rise just 10.5% annually over the next 5 years.

A weakening European economy is mostly to blame, as Ford takes steps to curb its operations in the region. I believe the company is making the necessary moves to cut down on its operational losses, and allow it to better grow earnings in the long-term.

Additionally, most analysts expect the company’s tax rates to rise this year, after receiving significant tax breaks in recent years. While an increase in taxes may dampen earnings in the short-term, the long-term growth prospects still look very strong.

Ford Motor Company (NYSE:F) has consistently proven analysts wrong over the last four quarters, beating estimates every time. I see no reason that trend won’t continue. The company is doing all the right things, and growing market share in the two largest markets.

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