3 Things Investors Need to Know About Ford Motor Co.'s Second Quarter
With newly appointed CEO Jim Hackett at the helm, Ford Motor Company (NYSE: F) posted a solid second quarter. Ford's revenue inched higher to nearly $40 billion and its adjusted earnings per share checked in at $0.56, far above analysts' calls for $0.43 per share -- more on that shortly. But beyond the typical numbers, there were some interesting takeaways for Ford investors; here are the details.
One of Ford's competitive advantages is its finance division, otherwise known as Ford Credit. It's often overlooked but shouldn't be, as it generates more profit for Ford than any of the company's regions outside of North America. Ford Credit's managed receivables jumped 6% to $142 billion and generated pre-tax results of $619 million -- a staggering 55% increase over the prior year. It was good enough to be Ford Credit's best quarterly pre-tax result since 2011.
Now, one large drawback to Ford owning a finance division such as Ford Credit is that when lease residual values plunge faster than anticipated, it weighs directly on the bottom line; that caused major pain during the past recession. And while the pressure from a wave of vehicles coming off-lease could still negatively impact prices, auction values remained stronger than Ford anticipated during the second quarter.
Source: Fool.com
Ford Motor Co. Stock
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