How Much Ford Can Add To Its Valuation If It Keeps Up Lincoln Growth From 2016
Ford Motor Company (NYSE: F) launched its premium car brand Lincoln in China with the goal of growing annual sales of the brand from 100,000 in 2014 to 300,000 in 2020. The company sold 11,000 vehicles in its first year of operation in China, becoming the first brand to achieve more than 10,000 unit sales in its first year in the country. This year the brand has seen its sales triple over the first three quarters and reach almost 21,000 units. Meanwhile, the brand has grown its sales by 9.5% in the U.S. through the January-November period.
On current pace, the brand is on course to achieving full year sales between 140,000 units to 150,000 units. This would imply a growth rate between 17% and 25%. The table below models the impact growing at the lower end of 2016 sales (17% growth) and high end of 2016 sales (25% growth) would have on the company’s valuation.
As one can see from the table above, growing at 17% could result in a 4.1% upside to our valuation for the company, while growing at 25% could result in a 10% upside to our valuation for the company.
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ford Motor
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