Despite its commitment to develop electric cars, Ford Motor Company (NYSE: F) sank sharply last week when markets focused on its preliminary 2017 – 2018 numbers. Investors should brace for under-performance in the stock once again.
Ford said on Jan 16 that it expects EPS of $1.78 in 2017, which is lower than the $1.84 expectation from analysts. Unadjusted, EPS will top $1.95. For 2018, Ford forecasts EPS of $1.45 to $1.70, which is within the $1.59 consensus. To reward its shareholders, Ford will pay $0.15 a share and an extra $0.13 a share in dividends.
Patient Ford shareholders, even though they will get a special dividend, will suffer again this year. Year after year, the stock underperforms and gives stock holders no share appreciation. Conversely, General Motors (NYSE: GM) is up over 35% from yearly lows. GM is also committed to EV but in the meantime, its line-up of vehicles continues to drive sales. GM survived an ignition switch lawsuit and from getting a government bailout during the financial crisis.
Ford, meanwhile, is on the defensive. It may strengthen its EV lineup to 40 vehicles (22 by 2022) while simplifying its gas-powered vehicle offering. But the uncertainties and underperformance ahead will limit any upside in F stock.
Ford will get attention from value investors. At current levels, the stock has upside potential but not for 2018.
Disclosure: author owns shares of Ford.
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