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Ford Seeks Clarity on Brexit to Frame UK Investment Plans

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Ford Motor Company (F - Free Report) stated that it needs clarification on the trading conditions in the aftermath of Brexit, per Reuters. Ample clarification on all aspects of trade is required to make any concrete investment decision in Britain. Significantly, Britain is Europe's second-largest automotive market. Following a referendum in 2016, the country is scheduled to leave European Union (EU) by the end of March 2019.

Ford is a leading producer of automotive engines in Britain. Presently, the company has its engine manufacturing hubs at Bridgend in Wales and Dagenham, London. The combined output of the two factories is 2.7 million units, which is almost half of the country’s total engine production.

The company intends to carry on with its engine production at its Bridgend factory. Per management, depending on the clarity regarding future trading conditions after Brexit, it will be able to take positive or negative decisions about its investment plans in the country.

Ford Motor Company Price and Consensus

Further, the company assumes that Brexit might impose custom checks and tariffs between Britain and EU. This may result in supply chain problems and elevated costs. Also, it expects that a hard Brexit will lead to World Trade Organization (WTO) tariffs of 10% in exports and imports. 

Price Performance

In the last three months, shares of Ford have underperformed the industry it belongs to. The company’s stock has declined 15.6% in comparison with the industry’s decline of 6.5%.

 

Zacks Rank & Key Picks

Ford has a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) , Navistar International Corporation and Oshkosh Corporation (OSK - Free Report) . Both Allison Transmission and Navistar flaunt a Zacks Rank #1 (Strong Buy), while Oshkosh Corp carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. In the last six months, shares of the company have gained 16.8%.

Navistar has an expected long-term growth rate of 5%. Over a year, shares of the company have gained 51.4%.

Oshkosh Corp has an expected long-term growth rate of 17.6%. The company’s stock has seen the Zacks Consensus Estimate for annual earnings being revised 1.3% upward over the last seven days.

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