Ford Motor Company (F) has been one of the worst-performing auto stocks for the last four consecutive years. Between 2015 and 2018, the stock lost nearly 15% of its market value.
Nonetheless, 2019 has turned out to be positive for Ford so far. As of February 4, it has risen 13.7% year-to-date compared to the 8.7% gain in the S&P 500 Index (SPY). In January 2019, the stock surged 15.0%. Let’s find out what could be the primary driver of these sharp January gains.
Key positive factors
In the first week of January, Ford released its December and 2018 sales data for its key markets. In 2018, the company’s total vehicle sales fell 3.5% YoY (year-over-year). These sales falls were primarily driven by an 18.4% decline in its passenger car sales. At the same time, its SUV (sport utility vehicle) sales and truck sales inched up 0.5% and 1.4%, respectively, in the United States in 2018.
In 2018, US light vehicle sales rose 0.3% YoY according to the data compiled by MarkLines. The data suggested a 13.1% decline in passenger car sales, while light truck sales, including the sales of pickup trucks, trucks, and SUVs, rose 8.0% in the year. The 2018 US sales data were far better than the data that had been projected by experts and automakers, including General Motors (GM) and Ford.
Better-than-expected 2018 US auto sales drove optimism among investors (DVY) and raised hopes in the auto industry for 2019 as well. This renewed optimism could be one of the main reasons why mainstream automakers, including General Motors and Ford, outperformed the broader market in January.
In the fourth quarter of 2018, Ford’s adjusted EPS stood at $0.30, down ~23.1% YoY. Nonetheless, the company managed to beat Wall Street analysts’ fourth-quarter revenue estimate by posting a 1% YoY rise in its revenue in the quarter.
To learn more about Ford’s fourth-quarter earnings results, read How the F-Series Boosted Ford’s Q4 2018 Results.