Ford (NYSE:F) actually beat consensus estimates and reported earnings of $0.26 for its 3rd quarter 2016. Investors had been warned that this quarter would not contribute much to earnings for this year. Personally, I believe Ford stock is in a precarious position at present, due to currently elevated investments. Probably, the economic cycles of auto sales in North America are also one reason for that. On the earnings call, the management tried to emphasize the strong performances in the Asia-Pacific region, specifically China, apart from Europe. Ford’s woes in Europe appear to be ending, as the company brought in almost $140 million before taxes in the third quarter. In fact, the auto manufacturer meaningfully increased its market share in the commercial segment in this region last quarter, which is encouraging. Furthermore, the company reported record earnings in the Asian-Pacific region, where China sales increased substantially due to price cuts and incentives. However, the market has always valued this stock based on its operations in North America and I don’t think this will change in the near term. So, should you buy Ford stock now?

Not All Q3 Earnings Headwinds Are Temporary

We didn’t see much change in the share price post earnings, because the management kept its $10.2 billion pre-tax guidance figure for 2016 intact. The management again said that 2016 would be the second-best year (earnings wise) for the company since the turn of the century. However, the market is more concerned about where earnings and sales are going in the near-term. In fact, the management attributed the 50% drop in 3rd quarter EPS, to temporary factors. Firstly, you had the $599 million recall charge which actually came in cheaper than the $640 million figure Ford stated last month. I agree that this cost will be temporary as these respective door latches were changed under warranty.