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Ford Motor Company (NYSE:F) announced record operating profit in its fourth-quarter earnings report for 2012. The company achieved pre-tax operating profit of $1.7 billion on revenue of $36.5 billion. The fourth quarter's operating profit represented the 14th consecutive quarter of positive profitability and was also the highest fourth-quarter operating profit since 1999.

Revenue for the full year was $134.3 billion resulting in pre-tax operating profit of $8.0 billion.

In the automotive sector the company continues to maintain its position as a leader in U.S. auto sales. In January Ford posted the sector's second-highest sales results with deliveries of 165,863 light vehicles. Vehicle sales were 21.7% higher than January 2012.

Ford's strong results in the post-recession environment can be attributed to its shift in product focus toward fuel-efficient vehicles, which has greatly helped it to improve profit margins.

Ford's Fusion has led fuel efficient product sales for the company supporting its strong post-recession sales growth. The Ford Fusion achieved record sales in 2012, finishing the year with 19,283 cars sold in December. In January sales for the Fusion increased to 22,399, up 64.5% from January 2012. Sales of the Ford Fusion also accounted for the majority of Ford brand cars in January, at 41%.

In addition to record sales from fuel efficient cars, Ford has also become the industry leader in net profitability. According to data from Morningstar, Ford achieved a 12-month trailing net profit margin of 13.35%, 10.4% higher than its closest competitor, General Motors (NYSE:GM).

Efficiency in managing profit margins has helped Ford to provide greater stock return for its shareholders. In 2009, following the peak recession year for the auto industry, Ford's stock value regained 323%.

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The redirected focus on fuel efficient vehicles and tighter controls on net margins have also helped the stock to continue its upward trend. For the five-year period through February 1 the stock returned 97.87%.

Furthermore, intrinsic valuation on the stock indicates it has a price target[1] of $13.35, undervalued in the current market environment. At $12.88 the stock has upside potential for investors seeking U.S. automotive stock exposure. Ford's strong product sales and industry leading profit margins should help it to continue building on its positive momentum.

1 The price target is derived from Bodie, Kane and Marcus' intrinsic value formula. The intrinsic value formula discounts the projected one-year future cash flow value by the risk-free rate on the one-year Treasury note plus a beta of 2.28 times the market's expected one-year risk premium. The market risk premium assumes stock market appreciation in 2013 to be similar to 2012 and is based on Dow Jones U.S. Total Market index return.

Source: Ford Powers Through Auto Recession With Substantial Gains