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Is Today's Big Sell-Off of Ford Shares Shortsighted?

Ford (NYSE: F  ) announced earnings today, and the market was not happy with the news; shares sold off by more than 7%. In this video on today's "Stock of the Day", host Mark Reeth and Fool analyst Taylor Muckerman take a look at some of the high costs Ford will be facing in 2014 that have investors cutting and running today. Apart from costs related to its One Ford program, designed to retool and unify its business structure and corporate culture worldwide, Ford will also be releasing 23 brand-new or highly refurbished models in several markets in the year ahead, which spells high near-term costs and compressed margins.

But is this news really as bad as the market seems to think? Taylor discusses in the video why this sell-off seems shortsighted for long-term investors. Not only does he cite the growth that Ford's new models will drive beyond 2014, but the company also announced that it has cut its legacy pension plans in half. Ford's legacy costs have long been a weight hanging around the neck of the company's share price. Taylor sees that a big reduction of these costs, and long-term growth for the company, are factors that offset the company's short-term compressed margins and lowered guidance for 2014. He views this sell-off as a very interesting possible buying opportunity for those looking to build out a position in Ford.

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7/25/2016 4:01 PM
F $13.83 Down -0.01 -0.07%
Ford CAPS Rating: ****