Ford Recalls More Than 500,000 Vehicles Over Post-Crash Risk

Ford Motor Company (NYSE:F) recently announced a safety recall of more than 500,000, Ford Super Duty SuperCrew vehicles, developed between 2017-2019, over post-crash interior firerisk. The action will affect 490,574 vehicles in the United States and federal territories, 56,112 in Canada, and 852 in Mexico.

The affected Super Duty vehicles were manufactured at Ford’s Kentucky Truck Plant from Oct 8, 2015-Oct 29, 2019.In affected vehicles, excessive sparks may emerge due to a front seat-belt pretensioner which is deployed during a crash, igniting the carpet or carpet insulation in the B-pillar region. Further, a fire in the B-pillar can spread within the vehicle, raising the risk of injury.

The dealers are expected to alter the sound deadener on the back side of the B-pillar trim panel, and apply foil tape to the carpet and carpet insulation, as required.

Like some of its peers, Ford too has been recalling a large number of vehicles of late due to safety issues. Frequent recalls for fixing faulty vehicles are concerns for the company. Apart from higher expenses for repairing faulty vehicles, recalls also hurt consumers’ confidence in a brand.

Meanwhile, Ford is actively working to introduce freshmodels of autonomous and electric vehicles, which seem to be the future of the auto industry. These initiatives are likely to boost Ford’sprospects. The firm plans to produce self-driving cars by 2021. Moreover, it intends to launch 30 vehicle models in China by 2025, of which one third will be electric vehicles (EVs).

Year to date, shares of Ford have outperformed the industry it belongs to. Its shares have appreciated 30.9% compared with the industry’s rise of 19.6%.

For full-year 2019, Ford expects adjusted EBIT of $7-$7.5 billion compared with the prior year’s $7 billion. Adjusted EPS is anticipated in the $1.20-$1.35 band compared with the $1.30 recorded in 2018. The range assumes a full-year adjusted effective tax rate in the band of 18-20%, which indicates a rise of 10% from the year-ago levels. This is likely to create a headwind of 12-16 cents per share for this year.

Zacks Rank and Stocks to Consider

Currently, Ford carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include Weichai Power Co. (OTC:WEICY) , Spartan Motors, Inc. (NASDAQ:SPAR) and SPX Corporation (NYSE:SPXC) . While Weichai Power flaunts a Zacks Rank #1 (Strong Buy) Spartan Motors and SPX carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Weichai Power has a projected earnings growth rate of 6.11% for the current year. Its shares have gained 75.5% over the past year.

Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have soared141.6% in a year’s time.

SPX has an expected earnings growth rate of 23.18% for 2019. The stock has surged 87.7% in the past year.

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