Ford's Good News Won't Last

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Shares of Ford Motor (NYSE: F) finished flat yesterday despite the company announcing a brighter outlook for the second quarter. This is the second such increase this year for the No. 2 U.S. automaker.

After the close on Wednesday, Ford raised its second-quarter earnings expectations to $0.45 to $0.50 per share. Previous estimates were placing per-share earnings in a range of $0.30 to $0.35. However, the company remains cautious about the second half of the year. As a result, despite the anticipated strong second-quarter performance, investors were unimpressed.

Are investors simply not giving Ford its deserved kudos? I don't think so. You may remember that Ford was the only major automobile manufacturer to report a year-over-year decrease in sales for May. Also, despite the significant increase in expectations for the second quarter, Ford was unwilling to budge on its forecast for the second half of the year. Current projections are calling for earnings of $0.24 to $0.29, which is a huge drop from last year's earnings per share of $0.46.

Ford will have to continue to battle the U.S. leader, General Motors (NYSE: GM) as well as a plethora of foreign competition, including powerhouses Honda (NYSE: HMC) and Toyota (NYSE: TM), which continue to chip away at its business.

Additionally, Ford's strong second quarter was, in large part, the result of a better-than-anticipated performance in its financial services business. The company will most likely not be able to count on similar results in coming quarters as interest rates are expected to rise.

Will the new hybrid Escape propel electric profits for the company? There's no doubt that Ford has a good head start on its competitors. But, it remains to be seen how much profitability the SUV will generate. And you can guarantee the competition won't sit idly by for much longer.

Based upon increasing interest rates, increasing competition, and its anticipated annual performance, I would have to agree with investors' non-reaction to the superficial good news. Overall, I would expect little movement in Ford's price in the near term.

Fools are talking about Ford's prospects in the hybrid market on our Ford discussion board. Join in the conversation.

Fool contributor Mike Cianciolo welcomes feedback and doesn't own any of the companies in this article.