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These Auto Stocks Lost Their Shine Last Week

PART:
1 2 3 4 5 6
Part 3
These Auto Stocks Lost Their Shine Last Week PART 3 OF 6

Why Ford Stock Turned Negative despite Solid October Sales

Ford stock

Last week (ended November 10), Ford Motor (F) stock settled at $12.01, registering a weekly loss of 2.8%. In the previous week, the stock rose 2.5% and began November on a strong note—unlike direct peer General Motors (GM), which fell 5.2%.

In September, Ford stock rose 8.5%, for its highest monthly gains in 22 months. The company’s stock continued this positive trend in October and ended the month with a 2.5% rise, compared with the 2.2% gain seen in the S&P 500 Index (SPY).

Why Ford Stock Turned Negative despite Solid October Sales

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Positive fundamentals

Earlier this month, Ford released its October 2017 US sales data. The company reported a handsome 6.2% YoY (year-over-year) rise in its US market vehicle sales despite industrywide weakness. Ford’s October sales gains were mainly driven by a 14.6% YoY jump in its fleet sales, along with a 3.5% YoY rise in its retail sales. The company’s truck segment sales rose 11.4% YoY last month.

On October 26, Ford reported 3Q17 adjusted EPS (earnings per share) of $0.43, compared with $0.36 in 3Q16, beating the analysts’ estimate of $0.32.

Despite weaker 3Q17 sales in North America (its largest geographical market), the company managed to improve its profit margins significantly last quarter. Among its other international markets, Ford’s 3Q17 performance in Asia-Pacific improved, while its performance in Europe and the Middle East worsened.

Last year, Ford was the second-largest auto industry player (XLY) in the US, after General Motors (GM) but ahead of Toyota Motor (TM) and Fiat Chrysler Automobiles (FCAU).

Is it a technical price correction?

On November 3, Ford stock tested a key resistance near $12.45 but couldn’t manage to violate it due to weak underlying momentum. Only an early violation of this resistance area could attract fresh buying and take the stock’s price to the next key resistance of ~$12.70 in the near term. The key support level in the stock lies at ~$12.00.

Ford is now maintaining strong fundamentals, and so the recent fall in its stock could be seen as a technical price correction.

In the next part, we’ll see how Fiat Chrysler stock traded last week.

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