Ford Motor Stock To $9?

Ford Motor (F) stock has jumped 11% during the past week, and is currently trading at $13.26. Our machine-driven multi-factor assessment suggests that it may be time to sell F stock. We have, overall, a pessimistic view of the stock, and a price of $9 may not be out of reach. We believe there are several things to fear in Ford Motor stock given its overall Weak operating performance and financial condition. Hence, despite its Low valuation, this makes the stock look Risky.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $53 Bil in market cap, Ford Motor offers design, manufacturing, and marketing of trucks, cars, SUVs, electrified, and luxury vehicles, along with mobility services and self-driving system development.

[1] Valuation Looks Low

This table highlights how F is valued vs broader market. For more details see: F Valuation Ratios

[2] Growth Is Moderate

• Ford Motor has seen its top line grow at an average rate of 7.8% over the last 3 years
• Its revenues have grown 3.7% from $183 Bil to $190 Bil in the last 12 months
• Also, its quarterly revenues grew 9.4% to $51 Bil in the most recent quarter from $46 Bil a year ago.

This table highlights how F is growing vs broader market. For more details see: F Revenue Comparison

[3] Profitability Appears Very Weak

• F last 12 month operating income was $3.6 Bil representing operating margin of 1.9%
• With cash flow margin of 10.8%, it generated nearly $20 Bil in operating cash flow over this period
• For the same period, F generated nearly $4.7 Bil in net income, suggesting net margin of about 2.5%

This table highlights how F profitability vs broader market. For more details see: F Operating Income Comparison

[4] Financial Stability Looks Weak

• F Debt was $164 Bil at the end of the most recent quarter, while its current Market Cap is $53 Bil. This implies Debt-to-Equity Ratio of 311.5%
• F Cash (including cash equivalents) makes up $42 Bil of $301 Bil in total Assets. This yields a Cash-to-Assets Ratio of 14.0%

[5] Downturn Resilience Is Very Weak

F has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• F stock fell 61.2% from a high of $25.19 on 14 January 2022 to $9.77 on 30 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $14.55 on 18 July 2024 , and currently trades at $13.26

 
2020 Covid Pandemic

• F stock fell 57.4% from a high of $9.42 on 2 January 2020 to $4.01 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 24 November 2020

 
2008 Global Financial Crisis

• F stock fell 86.9% from a high of $9.64 on 2 July 2007 to $1.26 on 19 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 December 2009

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read F Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.