Ford Motor Company (F): Profits in the Future are Closer Than They Appear

Ford Motor Company (NYSE:F) reported its fourth quarter results that lived up to the company’s tagline; indeed, it only gets brighter as you ‘Go Further!’

The rear view

Ford recently reported positive results for January 2013 with revenue growth of 1.9% from last year to $36.5 billion in the quarter. It exceeded analysts’ expectations of $33.17 billion.

The company posted a pre-tax profit of $1.7 billion, or $0.31 a share, well ahead of the Wall Street estimate of $0.26 per share. The company is still undervalued with a forward PE ratio of 7.75, a PEG ratio of 1.07, a price to sales ratio of 0.37, and a price to book ratio of 2.62.

Total revenue increased 5% in the quarter to $36.5 billion. Earnings per share of $0.31 were 52% higher than in Q4 2011 and exceeded estimates by 24%.

The overall sales showed a positive growth of 8%.

Ford on the fulcrum

The company faced financial crisis in 2008 and was able to navigate through the situation without being bailed out by the U.S. Government. Then last year Europe was the sore spot for Q4 as revenue declined 22%. Ford has closed down three factories in Europe to lower costs.

Ford still looks priced for an economic slowdown. However, signs are pointing towards continued vehicle sales growth rather than a decline. The driver that has moved the company from the lower end of the financial see-saw to its fulcrum is its North American segment. It is also financing growth prospects in Asia with a hike in sales of high-margin pickup trucks to boost up the figures. Ford has a great hold in the US and is presently looking forward to gaining a tighter grip in Asia. It sees China as a strong potential market that can take the company from the fulcrum to the higher end of the see-saw.

Under the hood

Consumers bought a new Ford Fiesta every two minutes on average last year, making it the best-selling small car in Europe, according to automotive data intelligence provider JATO Dynamics. 560,000 Fiestas were sold worldwide in 2012 alone. The Fiesta has now been the top-selling small car in Europe for 3 out of the past 4 years.

Ford is currently launching the new Fiesta in Europe, which is coming to dealerships now. It has been redesigned inside and out, and offers the 1 litre Eco Boost petrol engine, the 2012 “International Engine of the Year.”

With enhanced, state of the art features and the car’s improved technical aspects, its past record sales can simply serve to be the cherry on the cake. Sales are bound to rise, helping the company in pushing the profit figures up, which in turn can help its investors see better returns from their investments.