It’s time to talk about an automaker that has been out of favor for what seems forever. Here is the breakdown on $F, otherwise known as Ford.
Current Price: $9.02
52/Wk High: $9.575
52/Wk Low: $3.96
Market Cap: $35.2 billion
Read below for the breakdown!
Ford is one of the largest and most iconic automotive companies in the world, producing a vast array of vehicles and innovating within the industry since its inception.
While Ford Motor Company did arguably make the automobile what it is, the company has lacked for many years now, causing a terribly performing stock.
Taking a look at the stock price itself, TREFIS (@trefis) data breaks down what the stock price is based on. According to TREFIS 34.5% of the stock price is based on the Ford North America segment.
Below is a list, further breaking down what the rest of the stock price is based on.
13.0% = Vehicle Lease & Loans
3.1% = Ford Asia Pacific
2.2% = Ford South America
0.8% = Ford Middle East & Africa
0.3% = Ford Europe
46.1% = (Net of Debt) Cash
While the past few years if not decades have not been the best for Ford, new CEO Jim Farley is getting the company back in shape through some aggressive actions with the goal of boosting profits and taking Ford into the electric vehicle space.
It seems Ford finally has a CEO that cares not only about the companies profits and future, but stock price and investors.
For example, recently Farley took on Ford’s warranty costs by alerting suppliers that the company will now charge them half the cost of the warranty issue and that problems resolved more quickly will earn them (the suppliers) money back.
Furthermore, Ford is getting into the EV game with an entire lineup of EV vehicles dropping throughout the next several years.
Taking a deep dive into the numbers Ford beat big in its most recent quarter, Q3. Ford delivered a Q3 beat with an EPS of $0.65 versus the analyst’s EPS consensus estimate of $0.46.
Not only did EPS beat expectations but revenues came back as well, with Ford reporting Q3 total revenues of $37.5 billion. Net income topped expectations as well, totaling $2.4 billion in the third quarter.
Ford management also reported that the company generated $11.1 billion in operating cash flow along with an adjusted EBIT of $3.6 billion.
Management also noted that the company was prepping the Q4 launches of the 2021 F-150, electric Mustang, and the Bronco Sport.
When it comes to guidance management now expects the full year to create a positive adjusted EBIT and a Q4 adjusted EBIT to land between a $500 million loss to breakeven.
Taking a look at the balance sheet Ford has some work to do.
Total Debt: $157.275 billion
Total Liabilities: $226.818 billion
Total Assets: $259.943 billion
Cash & Short Term Inv: $44.831 billion
On the flip side, the valuation is far from beyond itself.
Price to Sales: 0.27x
Price to Book: 1.12x
Price to Cash Flow: 2.06x
Furthermore, management has room to improve.
Return on Equity: -0.20%
Return on Assets: -0.02%
Return on Invested Capital: -0.04%
Given the numbers, the analysts remain mixed.
High Price Target: $11.00, 21.95% Upside
Mean Price Target: $9.33, 4.88% Upside
Low Price Target: $9.00, 0.22% Upside
When it comes to the technicals it seems $F could be flashing opportunity. According to the six-month charts, the MACD has entered downward momentum within a range of 0.3390 down to 0.2875.
The six-month charts are also indicating an RSI of 55.13 and CCI of 6.25, both of which are neither good nor bad. It is important to note that Ford trades less than a point off its highs.
In short, Ford has a lot of work to do in regards to EV innovation, increasing profit, and catching up to the competition. Long term I am bullish on Ford but believe the stock will be slow.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.