Shares of Ford Motor (F) are down 49 cents, or 4%, at $13.08, a day after the company beat Q1 earnings estimates but missed revenue expectations by half a billion dollars.
Credit Suisse analyst Christopher Ceraso cut his rating on the shares to “Underperform” from “Neutral,” writing that the company’s level of profitability is “not sustainable,” and that the shares, which have followed the earnings momentum, can be expected to taper off with any weakness in that momentum.
Ceraso predicts several headwinds that are not yet apparent will show up this year, including “rising structural costs, to support global expansion; rising raw material costs; rising incentive costs in the US and Europe; and declining profitability in the finance company.”
Furthermore, the stock’s price is factoring in profit next year of $1.50, which is well ahead of his estimate of $1.05. The shares are well above a historical price-to-sales or price-to-Ebitda estimate, including debt and cash on the books.
In related news, The Wall Street Journal’s Yoshio Takahashi reports this morning that�Honda Motor’s (HMC) fiscal Q4 report this morning showed signs of a resurgent Honda in the U.S., with management at the company predicting a 27% rise in profit on a 14% rise in North American sales this year.
Or take theFinancial Times’sLex Column, which compares Ford’s net debt of $8 billion to the $7 billion in net cash General Motors has after emerging from bankruptcy. Lex argues the “easy money has been had” given ford was coming from behind in Detroit when CEO Alan Mulally stepped in.
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