Earnings Recap: Ford (F) Reports Best Q Since 2004

Earnings: Q2 profits, excluding items, of $0.68 vs. consensus estimates of $0.40.

Revenue: Up to $31.3 billion vs. consensus estimates of $29.5 billion and $26.8 billion for Q2 last year.

CEO Alan Mulally noted that Ford is “ahead of where we thought we would be despite the still-challenging business conditions.”

He later added that “we remain on track to deliver solid profits and positive automotive operating-related cash flow for 2010, and we expect even better financial results in 2011.”

Comment: Ford (NYSE: F), the only American automaker that was able to avoid bankruptcy, continued its strong 2010 campaign on Friday, as its report boosted shares by more than 5% to a closing price of $12.72.  Shares are up nearly 30% on the year.  Ford has benefited from a generally strong auto market and demonstrated an ability to sell its pricier models in high volume.  Total car sales came in at 175,895, up 13.3% YOY, with Ford and Mercury brands offsetting declines at Lincoln and Volvo.  Ford ended the Q with gross cash of $21.9 billion, down $3.4 billion QOQ, largely as a result of the company’s having paid down $7 billion in debt.

From a technical standpoint, shares are set to test a breakout through $12.97, at which point $13.70 and then $14.70 would become near-term objectives.  F is unquestionably the strongest U.S. company in its sector, and shares will outperform during periods of economic strength.  With it’s ever-strengthening balance sheet in tow, F would make a solid holding for any portfolio geared towards an economic recovery.

Disclosure: No holdings in F.

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