Ford Motor (F:NYE) reported fourth-quarter earnings that fell short of expectations and gave a downbeat outlook on Thursday. As a result, F stock dropped 8% in the premarket trading after the news.
Ford reported earnings of 51 cents per share, nearly double the year-ago quarter, but the 96% increase fell well short of estimates. Revenue grew almost 17% to $44 billion, better than forecast.
The auto giant’s CEO Jim Farley noted they should have done much better, having left about $2 billion in profits on the table that were within their control. As a result, Ford expects to generate $9 billion-$11 billion in adjusted earnings before interest and taxes (EBIT) for fiscal 2023, with the midpoint just below adjusted EBIT of $10.4 billion in 2022.
Analysts project Ford earnings of $1.65 per share, a 13% decline from 2022 levels, and the full year revenue is now seen growing 0.8%.
The downbeat earnings report and outlook follows rival General Motors’ (GM) beat-and-raise Tuesday. GM stock rose 5.6% to 41.50 on Thursday, but retreated 2.3% early Friday. Tesla (TSLA:NSD) stock rose 3.8% to 188.27 on Thursday and has gained more than 71% from its January lows.
As traditional automakers make a costly shift to electric vehicles, the transition is weighing down margins and sales. Ford saw its overall new vehicle sales in the U.S. shrink 2.2% in 2022, while GM managed to grow sales 2.3%. The chip shortage and other supply disruptions have led to affordability issues, with auto loan rates reaching a 20-year high and the average new vehicle price hitting a record $49,507.
Ford Motor Company Stock Analysis:
The stock of Ford Motor Company was last closed at USD 14.32. Analysts have a Buy rating on the stock and an average forecast of USD 14.93 for the next 12 months. According to Stock Target Advisor’s analysis, the outlook on Ford Motor Company is slightly bullish, as it has 8 positive signals and 5 negative signals. Over the past week, its stock price has seen a rise of 1.53%, 2.69% over a month and a decrease of 28.00% in the last year.
What we like:
High market capitalization
This is one of the largest entities in its sector and is among the top quartile. Such companies tend to be more stable.
Superior risk adjusted returns
This stock has performed well, on a risk adjusted basis, compared to its sector peers(for a hold period of at least 12 months) and is in the top quartile.
Superior total returns
The stock has outperformed its sector peers on average annual total returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile.
High dividend returns
The stock has outperformed its sector peers on average annual dividend returns basis in the past 5 years (for a hold period of at least 12 months) and is in the top quartile. This can be a good buy, especially if it is outperforming on total return basis , for investors seeking high income yields.
Underpriced compared to earnings
The stock is trading low compared to its peers on a price to earning basis and is in the top quartile. It may be underpriced but do check its financial performance to make sure there is no specific reason.
Positive cash flow
The company had positive total cash flow in the most recent four quarters.
Positive free cash flow
The company had positive total free cash flow in the most recent four quarters.
Superior Earnings Growth
This stock has shown top quartile earnings growth in the previous 5 years compared to its sector.
What we don’t like:
High volatility
The total returns for this company are volatile and above median for its sector over the past 5 years. Make sure you have the risk tolerance for investing in such stock.
Overpriced on cashflow basis
The stock is trading high compared to its peers on a price to cash flow basis. It is priced above the median for its sectors. Proceed with caution if you are considering to buy.
Highly leveraged
The company is in the bottom half compared to its sector peers on debt to equity and is highly leveraged. However, do check the news and look at its sector and management statements. Sometimes this is high because the company is trying to grow aggressively.
Low Revenue Growth
This stock has shown below median revenue growth in the previous 5 years compared to its sector
Low Dividend Growth
This stock has shown below median dividend growth in the previous 5 years compared to its sector.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.
