There's no doubt that Ford Motor Company (F) is moving in the right direction from where it was a few years ago. The company has slashed debt, increased total revenues, and boosted operating income from the lackluster year, 2008. As of late however, the stock has stalled and for some, there is uncertainty why the stock has fallen after beating earnings expectations recently by 4 cents. The main culprit of this ongoing issue is Europe.
Ford sales in the North America have been excellent and have continued to show growth in the slowly recovering U.S. economy. Their first quarter profit rose to $2.1 billion from $1.8 billion, revenue rose 4%, and they sold 36,000 more vehicles. Overall, though, their earnings fell 45% $1.4 billion due to the struggling European economy and poor sales in Asia. Uncertainty about Ford's success in markets outside North America have made investors cautious about buying into the stock. More sales analysis on Ford can be found here.
There is no doubt that Ford is producing a better product than it was years ago. They have made several upgrades to both the appearance and the accessories that come with their vehicles, such as touch-screen dashboard, a new outward appearance, better fuel economy, and inflatable seat belts. As a result of these upgrades, consumers are willing to pay more per vehicle. In this quarter alone, buyers have paid an average of $1,200 more per vehicle from the previous year.
Ford's stock has been bouncing around in a price channel of $10-13 a share recently. However, until numbers from Europe and overseas improve, the likelihood that this stock will take off are slim. Despite the grim European outlook, though, Ford now pays a 5 cent dividend and yields close to 2% at its current price. Although the dividend doesn't exactly make Ford a "high yielder" it still is an attractive sign that the company's financing is improving. The dividend also rewards those investors who have been long on Ford with a little value.
All in all, Ford is a terrific company hurt by an ugly global economy. Alan Mulally has made all the right moves to get this company moving in the right direction. Ford stock will break the $13 resistance mark one day when Europe gets its act together, but until then, the shareholders may have to wait while the company is temporarily "stuck in the mud."
Disclosure: I am long F.