Put aside a couple of one-time currency and commodity issues in Ford Motors'third and fourth quarters, and the automaker's margins “are pretty darn good,” Sterne Agee analyst Michael Ward told CNBC Friday.
Earlier in the day, Ford reported fourth-quarter profit that missed analysts' expectations due to what it said were disappointing sales outside the U.S. and rising commodity costs.
Ward said he is somewhat more optimistic about Ford than other analysts. He noted that in Europe Ford is “in a much better position than, for example, General Motors. They made money in six of the last eight years in Europe and they’ve been restructuring pretty successfully. In Europe, you’re talking about a penny either way. It’s not moving the needle.”
Where Ford has not kept pace is making money selling smaller vehicles, falling behind Volkswagen and Hyundai, Ward said. However, Ford is now trying to catch up and is selling smaller cars in Asia, Europe, and North America.
Ford is his top pick, the analyst said. One reason why is cash.
The automaker is “generating so much surplus cash, their balance sheet is restructured, it leaves room to improve their pension and other obligations for investment” and then return some of the cash to shareholders, Ward said. He predicts the company will "consider some creative ways" to do that.
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Ward does not own Ford Motor shares, but Sterne Agee does and it has co-managed a securities offering or provided banking services within the past 12 months.