Tykr
Login
Yes, I want a free trial

Ford (F)

Ford (F)
Sean Tepper Sean Tepper
Stock reviews
May 25, 2022

Is Ford stock a good buy?

In this article, we review Ford stock to determine if it’s a good buy, sell, or hold.

Table of Contents

Ford is a global automobile manufacturer founded in 1903 and based in Dearborn, Michigan. They are the second-largest US-based auto manufacturer behind GM and the fifth largest global auto manufacturer behind Toyota, Volkswagen, Hyundai, and GM. They have manufacturing plants in the US, Argentina, Canada, Germany, China, India, Mexico, Romania, Russia, South Africa, Spain, Thailand, Turkey, Venezuela, and Vietnam. 

Tykr Rating

  • Summary: Overpriced
  • Score: 8/20
  • MOS: 44%
  • Share Price: $12
  • Sticker Price: $22

Ford Company History

  • The first gasoline-powered automobile was created in 1885 by German inventor, Karl Benz. At the time, building just one automobile was time-consuming and expensive. The Ford Motor Company was created to make automobiles more affordable for the middle class.
  • In 1903, The Ford Motor Company was launched in an old factory with $28,000 ($919K in 2022 dollars) from 12 investors, two of which included John and Horace Dodge, who later started their own company. Henry Ford was 38 years old at the time.
  • During the early years, they were able to build just a few cars per day. Groups of two to three men would assemble a car from parts made by third-party suppliers.
  • Within a decade, the company refined the assembly line concept which allowed Ford to charge less per vehicle and sell larger volumes.
  • Between 1903 and 1908, Ford produced Models A, B, C, F, K, N, R, and S. Up to a few thousand of each model were sold per year until the popular Model T was released which sold millions over the duration of 20 years. The Model T was a 177-cubic-inch (2.9 L) inline four-cylinder engine, producing 20 hp for a top speed of 42 mph (68 km/h). The Model T had fuel economy between 13 and 21 mpg.
  • In 1922, Henry Ford purchased the Lincoln Motor Company in an attempt to compete with more luxury brands including Cadillac and Packard.
  • In 1927, Ford replaced the Model T with the new model A, the first car with safety glass built into the windshield. This type of glass did not shatter with particles of glass flying at the passengers during a collision. Safety glass was a new type of glass that could withstand high impact and when shattered, it did not break apart like typical glass. 
  • In 1929, Ford was contracted by the Soviet Union to establish an automobile plant in Russia focused on building Model As and Model AAs. The expansion to Russia played an important role in the industrialization of that country.
  • In 1932 Ford launched the first low-priced car with a V8 engine. A 201-cubic-inch (3.3L) engine producing 65 hp for a top speed of 76 mph (122 km/h).
  • In 1955, Ford established the Continental division as a separate luxury car division. 
  • In 1956, Ford introduced the Lifeguard package which included deep-dish steering wheels, optional front and rear seatbelts, and an optional padded dash.
  • In 1957, Ford introduced child-proof door locks and a retractable hardtop.
  • In 1959, Ford introduced the Ford Motor Credit Company which allowed customers to finance the purchase of automobiles and at the same time, introduced a new revenue stream for Ford.
  • In 1964, Ford introduced the Ford Mustang. A V8 4-speed manual transmission with 271 hp and a top speed of 117 mph (188 kh/h). At the time, the Ford Mustang brand new retailed at $2,368 ($22,084 in 2022 dollars). 1964 was considered a great year for classic muscle car fans as that same year Pontiac released the GTO and Chevy released the Chevelle. 
  • By April of 1965, Ford had sold almost 419,000 Mustangs. 
  • In the 1980’s Ford introduced the popular and memorable slogan, “Have you driven a Ford, Lately”.
  • In 1990, Ford acquired Jaguar.
  • In 1994, Ford acquired Aston Martin. 
  • In 1998, William Clay Ford Jr (Bill Ford), great-grandson of Henry Ford, was appointed executive chairman and become CEO in 2001. Bill Ford was the first Ford family member to lead the company since Henry Ford II exited the CEO role in 1979. Since Bill Ford carried the name “Ford”, he didn’t want to be perceived as a “silver spoon child”, so when he started working for the company in the 1980’s, he changed his name and started working in various roles including product development, finance, and climate control. He wanted to learn the company from the ground up instead of stepping into a leadership position from the start. This journey to learn how the company is truly run proved to be a great decision on his part because he made certain decisions in the 2000’s that allowed the company to avoid a bailout during the 2008 recession.
  • In 2000, Bill Ford announced the company would achieve a 25% fuel efficiency in the company’s light truck fleet, including SUVs. Under his direction, Ford released the Ford Escape, the first hybrid vehicle on the market which achieved a 36 mpg.
  • By 2005, Ford’s corporate bonds were downgraded to junk status as a result of high health care costs, an aging workforce, soaring gas prices, and diminishing market share due to the competition. As a result, the company consolidated production lines, closed 14 factories, and cut 30,000 jobs. 
  • In 2006, the company reported its largest company loss of $12.7B and estimated they would not return to profitability until 2009. However, by running a leaner operation, they surprised Wall St in 2007, generating $750M in profit.
  • In 2006, Bill Ford stepped into the Executive Chairman position while Alan Mulally stepped into the CEO position.
  • In 2008, Ford sold Jaguar and Land Rover to Tata Motors for $2.3B.
  • The 2008 recession caused consumers to stop buying cars which almost put GM and Chrysler out of business. The US government had to bail out GM and Chrysler with bridge loans whereas the financial decisions set into motion by Bill Ford earlier in the decade allowed the company to retain a strong enough balance sheet and avoid taking the loan.
  • In 2012, Ford’s corporate bonds were upgraded from junk to investment grade.
  • In 2016, Ford announced a plan to modernize its manufacturing headquarters and double the workforce to 24,000.
  • In 2017, Ford acquired majority ownership of Argo AI, a self-driving car startup.
  • In 2017, Ford announced it would cut its workforce again due to the declining market share caused by rising competitors including Telsa. This caused Ford to increase its focus on EVs.
  • In 2018, Ford announced it would discontinue passenger cars in North America due to decreasing demand for cars and increasing demand for SUVs. One of the only cars that would continue to be produced is the Mustang.
  • In 2022, Ford announced it would restructure the company into three divisions. Ford Model E would focus on electric vehicles. Ford Blue would focus on combustion vehicles. Ford Pro would focus on commercial vehicles. 

Ford News

This article from finance.yahoo.com states that Ford may be a good stock to buy right now. The article explains how the F-150 lightning is already sold out and the Mustang Mach E is already a big hit that has proven to compete well against Tesla. Ford is currently on a mission with EVs as the company intends to invest $50B to produce more than 2 million EVs by 2026. This will threaten the market share of two of the top EVs in the world including Tesla and Volkswagen.

This article from finance.yahoo.com says that President and CEO Jim Farley stated that Ford will create vehicles as software platforms. In other words, automobiles are now more than just tools to get you from point A to point B, they now should be capable of doing more. For example, the Ford F-150 lightning has a fold-out desk and enough battery storage to power your home.

This video review from Youtuber Marques Brownlee provides a detailed tour of the Ford F-150 Lightning. Needless to say, this is one impressive vehicle. The vehicle’s retail cost starts at around $40K, has a mileage range of over 300 miles, has a 0-60 speed in just over 4 seconds, includes a 15-inch touch screen, has ergonomic storage everywhere, and has plenty of plugs to power computers, phones, tablets, and tools (if you use your truck for work).

This article from cnbc.com states that Ford plans on becoming the no. 2 EV auto manufacturer behind Tesla, by 2025. Farley said they do plan on overtaking Tesla as the no. 1 EV automaker but he didn’t provide a timeline. The Ford F-150 has been the top-selling truck in the world for over 40 years and the introduction of the F-150 lightning will definitely take market share away from Tesla.

This article from nytimes.com states that EV sales in the world make up 3% of global auto sales but could surpass gas-powered auto sales by 2040. The top players in the EV market will continue to be Tesla, Volkswagen, and Ford. It’s also important to point out that new EV manufacturers like Rivian are joining the fold which will also threaten the market share of the top three listed above. In fact, Volkswagen is continuing to take market share away from Tesla in Europe and Nio, Li Auto, and Xpeng are taking market share away from Tesla in China. Ford will most likely see positive growth around the world with the F-150 lightning however, the Mustang Mach E might have difficulty competing with Volkswagen in Europe. EV investors should be well aware of the competition before buying stocks.

This article from best-selling-cars.com states the top 4 best-selling cars in Europe in 2021 include the Tesla Model 3, Renault Zoe, Volkswagen ID3, and Volkswagen ID4. This is a good sign for VW and Renault shareholders but a bad sign for Tesla shareholders.

Ford Competition

Ford (F)

  • Summary: Overpriced
  • Score: 8/20
  • MOS: 44%
  • Share Price: $12
  • Sticker Price: $22
  • Revenue: $136B

Tesla (TSLA)

  • Summary: On Sale
  • Score: 17/20
  • MOS: 61%
  • Share Price: $35
  • Sticker Price: $35
  • Revenue: $53B

General Motors (GM)

  • Summary: Watch
  • Score: 14/20
  • MOS: 1%
  • Share Price: $628
  • Sticker Price: $1,614
  • Revenue: $127B

Volkswagen AG (VWAPY)

  • Summary: Watch
  • Score: 16/20
  • MOS: 1%
  • Share Price: $15
  • Sticker Price: $15
  • Revenue: $250B

Renault (RNL.DE)

  • Summary: Overpriced
  • Score: 8/20
  • MOS: 1%
  • Share Price: €23
  • Sticker Price: €24
  • Revenue: €46B

Ford 4M’s

Now let’s take a look at the 4 M’s. A wise investor should always look past the numbers and look at the business.

MOS: With a score of 8/20 the overall financials could be a little better. When you take a closer look at the financials, the revenues are flat but the most recent annual net income has greatly improved which is a great sign. It’s also important to point out the MOS is 44% which shows some upside potential. Although the stock is Overpriced, it’s nearly classified as Watch or On Sale.

Meaning: 3% of auto sales today are EV. This provides a perspective on how much EV growth we can expect over the coming decades. We also know the Ford F-150 will do very well globally. Ford needs to increase their production capacity on this vehicle model alone if they want to take global market share away from Tesla and Volkswagen.

Moat: Speaking of Tesla and Volkswagen, that’s where the competition is today. Sure, there are a lot of small EV players popping up but they aren’t a big threat yet. Tesla and Volkswagen will continue to compete with EV cars while Ford takes the market with EV trucks. This is a great place to be for Ford.

Management: Jim Farley became CEO in 2020 and took the additional role of president in 2022. In addition, he is on the Board of Directors. Before stepping into the role as CEO and President, he also served as COO where he strengthened the company’s operations including product development, purchasing, enterprise product line management, manufacturing, marketing, sales, service, quality, and new model launch. He also served in roles including executive vice president of global marketing, sales, and service. Prior to joining Ford in 2007, he was VP and General Manager of Lexus. Prior to Lexus, he joined Toyota in 1990 and worked in the strategic planning department. Overall, Jim has a lot of great experience working for some of the top auto manufacturers in the world. In fact, his time with Toyota and Lexus built a strong operational foundation as those auto manufacturers are known to be best-in-class regarding manufacturing processes.

Ford Financials

Now let’s take a look at the financials. A wise investor should be able to read the income statement, cash flow statement, and balance sheet and within 60 seconds have a pretty good idea of how the business is performing.

Revenue (Found on the Income Statement)

  • 2018: $160B
  • 2019: $155B
  • 2020: $127B
  • 2021: $136B
  • Revenue is flat. We know that EV sales are just getting started.

Net Income (Found on the Income Statement)

  • 2018: $3.6B
  • 2019: $47M
  • 2020: -$1.2B
  • 2021: $17B
  • Net Income has significantly improved in 2021 which is a great sign. 

EPS (Found on the Income Statement)

  • 2018: .93
  • 2019: .01
  • 2020: -.32
  • 2021: 4.48
  • EPS has significantly improved as well which is a good sign.

Free Cash Flow (Found on the Cash Flow Statement)

  • 2018: $7.2B
  • 2019: $10B
  • 2020: $18.5B
  • 2021: $9.5B
  • Free Cash Flow has declined since 2020 which is most likely due to the investment into EV production.

Total Assets (Found on the Balance Sheet)

  • 2018: $256B
  • 2019: $258B
  • 2020: $267B
  • 2021: $257B
  • Total Assets remained relatively flat.

Total Liabilities (Found on the Balance Sheet)

  • 2018: $220B
  • 2019: $225B
  • 2020: $236B
  • 2021: $208B
  • Total Liabilities have decreased in 2021 which is a great sign.

Total Debt (Found on the Balance Sheet)

  • 2018: $154B
  • 2019: $155B
  • 2020: $162B
  • 2021: $139B
  • Total Debt has decreased in 2021 which is a great sign.

Total Equity (Found on the Balance Sheet)

  • 2018: $35.9B
  • 2019: $33.1B
  • 2020: $30.6B
  • 2021: $48.5B
  • Total Equity has significantly increased in 2021 which is a great sign.

Is Ford stock a good buy?

Although the stock is currently Overpriced, the financials are moving in a direction where the stock may change to Watch or On Sale very soon. We know the Ford F-150 Lightning will sell very well globally, but the challenge is production. Can Ford increase production to keep up with demand? We also know that Tesla and Volkswagen have a strong presence globally and Renault has a strong presence in Europe. Fortunately, Tesla, Volkswagen, and Renault are more competitive with each other over cars. With Ford, it all comes down to the Ford F-150 Lightning. If you’re interested in EV stocks, now may be a good time to add Ford to your watchlist. If this stock changes to watch or overpriced, we could see more institutions and retail investors buy this stock which will see the share price increase.

—

The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.

If you found this stock review interesting, you may also like this review on Nova ltd.

Close
Search

Hit enter to search or ESC to close