Strong Head Winds Ahead
While Ford Motor Company (NYSE:F) didn’t give any specific guidance for 2017, it said that it expects the performance to be little softer than 2016. Ford’s bottom line will come under pressure this year as the company plans to invest more than $4.5 billion in electric and autonomous cars among others. The company is also going to take a hit from declining resale value of used cars. According to a report by Bloomberg, a glut of used vehicles is depressing the value of used cars, forcing leasing companies to charge higher depreciation.
Ford had recently announced that its financing arm will take a hit of $300 million (3) in profits in 2017. In Q4, the company took a hit of $72 million in lease residuals. Rising interest rates will also have an adverse impact on the company’s revenue as the cost of auto finance will go up. Additionally, the company is also at a risk of getting caught in the middle of US-China trade war. Analysts’ expect FY 2017 revenue to decline by 0.5% while EPS is expected to decline by more than 8%.
While Ford Motor Company (NYSE:F) stock may not be a good investment for growth investors right now, the stock is currently yielding an attractive dividend. With the current dividend yield of 4.86% and strong cash flows, Ford stock is a good investment for income investors. Meanwhile, if you are looking to invest in auto stocks, here are our latest top Auto Stock Picks which have consistently outperformed the market.
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