Ford Revs in First Quarter

 Ford Motor Company (F) reported outstanding first-quarter results Tuesday that confirm our investment thesis is playing out. Thus, we are likely to leave our fair value estimate unchanged.

The company crushed consensus earnings per share estimates of $0.50 with adjusted EPS of $0.62 and GAAP EPS of $0.61. The largest special item was a $60 million charge to redeem all of the trust preferred securities in March, as previously announced. Every geographic segment posted improved pretax profit from the first quarter of 2010, and automotive net cash increased to $4.7 billion, a $3.3 billion improvement from the end of 2010. Revenue for the quarter also easily beat expectations by coming in at $33.1 billion, up from $28.1 billion in the year-ago quarter.

The key takeaway is that Ford continues to post strong profits based on selling desirable vehicles that generate enough economies of scale to offset headwinds such as higher commodity and structural costs. Although Ford did warn in its release that the rest of the year will not be as strong as the first quarter, we believe our thesis of recovering global auto volume boosting profits is intact. We will publish a more detailed note after the earnings call.

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