Ford Motor Company (F) designs, manufactures, and services a range of Ford trucks, cars, sports utility vehicles, electrified vehicles, and Lincoln luxury vehicles. The company operates through the broad segments of Automotive; Mobility; and Ford Credit. 

The company has recently confirmed that it would reduce its salaried workforce by 2,000 and agency employees by 1,000 in the United States, Canada, and India. The company intends to trim costs and reorganize its business model. The company has been working on its radical Ford+ plan to enhance competitive ability in the electric vehicle field.

The stock has gained 18.4% over the past year and 13.4% over the past three months. It has gained 5.2% over the past month to close its last trading session at $15.45. The stock has a trading volume of 65.26 million and an average trading volume of 60.23 million.

Here are the factors that could affect F’s performance in the near term:

Solid Financials

For the fiscal second quarter that ended June 30, F’s total revenues increased 50.2% year-over-year to $40.19 billion. Adjusted EBIT rose 253.5% from the prior-year quarter to $3.72 billion. Adjusted net income and adjusted EPS improved 439% and 423.1% from the same period the prior year to $2.75 billion and $0.68.

Cheap Valuations

In terms of its forward non-GAAP P/E, F is trading at 7.51x, 41.8% lower than the industry average of 12.91x. The stock’s forward non-GAAP PEG multiple of 0.14 is 87.3% lower than the industry average of 1.13. 

In terms of its forward Price/Sales, it is trading at 0.43x, 52.7% lower than the industry average of 0.90x. Its forward Price/Cash Flow multiple of 5.67 is 46.5% lower than the industry average of 10.60.

Favorable Analyst Expectations

The consensus EPS estimate of $0.51 for the quarter ending December 2022 indicates a 96.2% year-over-year increase. Likewise, the consensus EPS estimate for the fiscal year 2022 of $2.08 reflects an improvement of 30.8% from the prior year. 

Analysts expect revenues for the same periods to rise 12.6% and 15.8% year-over-year to $39.69 billion and $146.14 billion. EPS is expected to increase 74.2% per annum over the next five years.

POWR Ratings Reflect Promising Prospects

F’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

F has a Growth grade of B in sync with its solid bottom line growth in the last reported quarter. The stock also has a B grade for Value, consistent with its low valuations.

In the 65-stock Auto & Vehicle Manufacturers industry, F is ranked #21.

Click here to see the additional POWR Ratings for F (Momentum, Stability, Sentiment, and Quality).

View all the top stocks in the Auto & Vehicle Manufacturers industry here.

Bottom Line

F’s realignment toward electric vehicles should benefit the company in the long term. On top of it, the company showed solid financial growth in the last reported quarter. Moreover, its trailing-12-month ROE of 29.61% is 92.5% higher than the industry average of 15.38%. Hence, I think this active stock might be a solid buy now.

How Does Ford Motor Company (F) Stack Up Against its Peers?

While F has an overall POWR Rating of B, one might consider looking at its industry peers, Volkswagen AG (VWAGY) and Stellantis N.V. (STLA), which have an overall A (Strong Buy) rating.

F shares were trading at $15.40 per share on Wednesday morning, down $0.05 (-0.32%). Year-to-date, F has declined -24.23%, versus a -15.32% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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