Ford swings to $800 million loss in the 4th quarter of 2016

FordFord Motor Company (NYSE: F) which is the 2nd largest auto manufacturing company in the world has reported a net loss in the 4th quarter of fiscal 2016. The company incurred profits during the same period last year.

Contrary to the estimates of the analysts, the adjusted earning did surpass but not the revenue.

It is natural that the speculators and investors are not happy with the financial results of the company. As on Tuesday, the stocks closed at $12.35. It is likely that the shares will dip in the coming time and the reason for that is mentioned below.

Ford Motor Company which is based in Michigan reported revenue of $38.7 billion in the 4th quarter which is less than $40.3 billion during the same quarter last year.

In the current quarter, there is a net GAAP loss of $783 million or $0.20 per share of Ford Motor. The adjusted net income comes to $1.218 billion or $0.30 per share after excluding the charges. The figure is also less than the estimate of $0.31 per share of Wall Street Journal.

Ford Vehicles

The traders and analysts do not seem to be in a happy state with the format used for the publication of results. The format is not similar to the one submitted to Securities Exchange Commission (SEC). The GAAP and Non-GAAP results for the similar period in a previous year are also not available.

In addition to this, there was no explanation for the GAAP loss of $800 million in the 4th quarter. The company has clarified that the net loss was because of $3 billion charges that were taken for revalidation of obligations and assets in the retiree benefit plan of the company. The company also added that it had received an additional $200 million for the suspension of the assembly plant situated in Mexico.

The wholesale volumes decreased 68000 to 1.71 million vehicles during the 4th quarter. The company also stated that pre-tax profits would be lower than 2016. The company continues to face headwinds in South America. The problems are further increased by the rising expenses, and frequent product recalls.

The company is facing fierce competition in China from the local manufacturers. It has compelled the company to reduce the prices. The bottom line of the company is also affected by the strength of US Dollar  (or Yuan’s weakness). Ford is anticipating that the growth would slow down in China because of smaller tax cut benefits.

There is a decline of 2.1 percent in net profit margin in the current quarter for Ford as compared to about 8 percent three quarters ago. As a result of which, the stocks of the company would remain weak in the present quarter.

If you look at the image below carefully, you will find that the stocks of the company have formed a double top pattern. The stochastic oscillator continues to form lower highs. This indicates that the shares would lose momentum. As a trader, you can quickly expect the stocks of the company to dip further in future.

Ford Stock Price: February 1st 2017

Ford Stock Price: February 1st, 2017

If you want to make profits from the stock’s decline of Ford company, you need to buy a low or below contract. The expiry period of the contract should be in the 2nd week of February, and if you want to succeed, you should BUY the deal when the stock trades over $12.30.

Rich Archer

Rich Archer

Hi, my name is Rich Archer. I am living in London. Welcome to Binary Manual. Reach to Binary Options broker reviews and market news here.


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