Don’t Bet On Ford Motor Company (F) Stock Going Into Earnings

Why Ford Stock Is Underperforming

Ford Motor Company (NYSE:F) stock has underperformed the market by a wide margin in the last one year. Ford stock has gained around 2.75% while S&P 500 (INDX:SPAL) has gained more than 20% in the same period. The main concerns of investors are rising oil prices, lackluster FY 2017 guidance and rising interest rates. Analysts expect Ford’s earnings and revenue to decline in 2017. Also, as can be seen from the analysis of Ford’s sales above, the growth was largely driven by gas-guzzling SUV’s and trucks segment. The strong sales in these two segments have been fueled by low oil prices. But the recent pick-up in oil prices might dampen the demand for fuel inefficient vehicles such as SUV’s and pick up trucks.

Another worry for Ford investors is the rising number of used vehicles. As per a Bloomberg report (3), Americans will return 3.36 million leased cars and trucks this year, up 9% from last year. Last year, the number of returned car had jumped by 36%. The glut of returned leased cars is suppressing their resale value which will impact Ford’s financial services arm which leases its vehicles. Ford recently announced $300 million reduction in its 2017 profit forecast. Also, the lower resale value of the used cars will impact the sales of new cars as many customers may be attracted by the cheap prices of the used cars.

Ford Stock Is Losing Momentum Going Into Q4 Earnings

Ford stock is losing momentum going into Q4 earnings. F stock is in consistent decline and has lost more than 6% since January 4th. The stock is currently testing its 50-day moving average, and MACD is turning bearish, indicating that the stock may breach the support at the 50-day SMA and head lower in case of any negative news from the earnings. The stock is also seen forming a double top, which is a bearish pattern. The recent stock price movement and bearish MACD indicates that market is not expecting anything game changing from the Q4 earnings. Investors should watch out for the company’s FY 2017 guidance. Wait for earnings before buying Ford stock.

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The article Don’t Bet On Ford Motor Company (F) Stock Going Into Earnings originally appeared on amigobulls.com. Watch our analysis video on F

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Additional Links:

(1) https://www.bloomberg.com/politics/articles/2017-01-23/spicer-stands-by-inauguration-audience-claim-in-first-briefing?ref=il

(2) http://www.fool.com/investing/2017/01/06/ford-china-sales-december-2016.aspx?ref=il

(3) https://www.bloomberg.com/news/articles/2017-01-23/ford-seen-as-canary-with-record-leases-spurring-used-car-glut?ref=il