Ford Leads Truck Boom as U.S. Auto Sales Seen Beating Estimates
Comment of the Day

November 01 2017

Commentary by Eoin Treacy

Ford Leads Truck Boom as U.S. Auto Sales Seen Beating Estimates

This article by Jamie Butters, Keith Naughton and David Welch for Bloomberg may be of interest to subscribers. Here is a section:

Ford F-Series deliveries surged 16 percent for their best October since 2004, and the automaker’s total U.S. sales beat analysts’ estimates. Demand also jumped for GM’s Chevrolet Silverado and GMC Sierra, Fiat Chrysler Automobiles NV’s Ram pickup and Nissan Motor Co.’s Titan full-size trucks.

The strong showing by pickups is a positive indicator both for carmakers’ profits and the U.S. economy. Companies added more workers than forecast to U.S. payrolls last month as employment in the construction industry -- a sector closely tied to truck sales -- climbed to the highest in more than a decade. Automakers also are benefiting from consumers in Texas, the nation’s top truck market, continuing to replace vehicles damaged by Hurricane Harvey.

“We did see continued hurricane replacement at the beginning of the month,” Michelle Krebs, an analyst at car-shopping website Autotrader, said by phone. “The economic factors are also in trucks’ favor. People are back to work and construction activity is up, which is good for truck sales.”

Eoin Treacy's view

A lot of vehicles were totalled in the aftermath of hurricanes Harvey and Irma and continued positive economic data is a bonus for truck manufacturers. The fact the hurricanes hit two states where truck ownership is high suggests demand will continue at least through the end of the year as some insurance checks take longer to arrive than others. 

Ford (Est P/E 6,87, DY 4.84%) is trading on an undemanding multiple and rallied in September to break above the trend mean. It is now testing the upper side of a short-term range and a clear downward dynamic would be required to question current scope for additional upside. 

Fiat Chrysler (Est P/E 6.83, DY N/A) surged higher in September and has paused over the last few weeks as it consolidates the earlier advance. 

General Motors (Est P/E 6.78, DY 3.56%) surged out of a three-year range in September and is now consolidating the breakout. 

Tesla does not have an estimated P/E at the time of writing because it is not expected to have positive earnings within the next year. It announced its earnings today which were below expectations, again, so that is likely to impact the share tomorrow. It had pulled back over the last month to test the region of the trend mean and will need to demonstrate a return to demand dominance in this area if some semblance of consistency is to be sustained.    

Back to top

You need to be logged in to comment.

New members registration