Shares of automaker Ford Motor Company (NYSE: F) were crushed on Tuesday after management said that its third-quarter profit will take a hit due to parts shortages that are expected to leave about 40,000 to 45,000 near-complete vehicles sitting around at the end of the quarter. With its shares already looking cheap before this sharp decline, is this a buying opportunity for investors ?
Sure, Ford may be facing some unexpected near-term challenges. But investors willing to look beyond the quarter have good reason to consider buying into the automaker at this discounted valuation. After all, management did reiterate its full-year target for adjusted earnings before interest and taxes (EBIT). This suggests that Ford's current issues will likely be resolved in the fairly near future.
Not only will Ford wrap up its third quarter with 40,000 to 45,000 vehicles "lacking certain parts presently in short supply," according to management's update on Monday afternoon, but these "vehicles on wheels," as Ford refers to them, are disproportionately skewed toward "high demand, high margin models of popular trucks and SUVs."
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Ford Stock Just Got Hammered: Buy the Dip?