Ford Motor Company (F) started off 2011 with the company's best earnings report in five years. The stock market reacted by pushing down Ford's share price by approximately $1 over the next month.
Ford kicked off 2011 with the share price climbing to almost $19 per share near the end of January. The share value dropped quickly from there and spent the next four months in a $14 to $16 trading range.
For the first quarter of 2011, Ford's net income increased to $2.55 billion from $2.08 billion in 2010, a gain of 22 percent. Net income per share increased to 61 cents from 50 cents a year earlier. Total revenues for the first quarter came in at $33.1 billion.
Ford made money in the first quarter by selling more cars and trucks. The pre-tax automotive profit of $2.1 billion was an almost doubling of the car and truck selling profits from the previous year opening quarter.
In the first month of the second quarter, Ford saw April sales continue the strong growth. Car sales were up 25 percent from a year earlier, SUV and truck sales each gained 11 percent. Total vehicle sales increased 16 percent in April.
Lack of faith
The consensus earnings estimate for full-year Ford earnings is $2.30 per share. At $15 the stock trades at 6.5 times the consensus. In comparison, Toyota (TM) trades at about 20 times the 2011 earnings forecast. There seems to be a lack of belief among investors that Ford can maintain momentum in sales and earnings growth.
As of May, only a quarter of analysts following the auto industry rated Ford as a buy compared to two-thirds rating rival General Motors (GM) as a buy. That said, Peter Nesvold at Jefferies & Co. rates Ford a buy due to increasing profit margins and more new models coming to market in the near future.
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