Ford Motor Company Stock Analysis
Table of Contents
Ford motor company is an American automaker. It was started in 1903 by Henry Ford. Ford motor company sells commercial vehicles and automobiles. The company sells its luxurious cars under Lincoln brand and the commercial vehicles under its brand. It owns the following manufacturers; the Toller car manufactures, the Brazilian SUV, and the Australian performance car manufactures (“Home”, 2017). It has been listed in the New York Stock Exchange. The Ford family controls the Ford motor company, however the family has the minority ownership but with the majority voting power. It is the fifth largest automaker in the world, from the 2015 vehicle production report. The company uses the SWOT analysis in its process to improve performance. Its strengths that support the effectiveness in the company are; it’s global supply chain, its strong brand image and its effective innovation procedures. The company weakness include; the slow innovation procedures, the company high costs on the automobiles compared to their competitors such as Toyota cars in the market and the global scope of production network limitations compared to Toyotas expensive global network. Its opportunities include; its growth by market penetration and product development through innovation, and cost reduction by expanding its supply chain. Its threats in the market are; fierce competition rivalry from General motors and Toyota, threats on entry of new high technology firms like Google that aims at introducing driverless cars and finally the threats on oil prices fluctuation that affects the sales of the company (Shingō, 2008).
Investment Thesis and Valuation
Ford motor company as per December 2016, it recorded the following numbers in its income statement; gross profit of $25,216 compared to the $23,063 attained in December 2015; balance sheet recorded, total current assets of $ 108,401,000 as per 2016 compared to $ 102,587,000 in 2015, total assets of $237,961,000 compared to $ 224,925,000 in 2015 which is a decrease in the assets. Total liability and equity, as per 2016 was $ 337,901,000 compared to the $224,925,000 in 2015. Its liquidity ratio; current ratio as per 2016 was 120%, in 2015 it was 125%, quick ratio in 2016 was 110% to 114% in 2015, cash ratio in 2016 was 43% to 43% of 2015. As per December 2017, Ford motor stick opens at $12.61 (0.022%) and closes at $12.58. its market cap is at $ 49.97B, dividend of $0.15, outstanding shares of $3.89B, a public float of $3.89B and short term interest of $120.72M . it recorded a beta of 1.16, revenue per employee of $766.69K and average volume of $ 35.49M. Its stock performance in 5 days is at 1.82%, in 30 days is at 5.04%, in 90 days is at 8.48% and in a year is at 0.60% (Connor, 2017).
Its future cash flow using the discounted cash flow analysis; year 1 growth rate will be at 2.32%, year 2 at 1-12%, year 3 at -0.08, year 4 at -1.27% and year and onwards at-2.47%. Relative value of Ford motors compared to other competitors as per 2016; total asset turnover- ford motor 0.59, General motors 0.71; current ratio- ford motor 1.20, general motors 0.89; debt to equity- ford motors 4.90, general motors 1.93; price per book value- ford motors1.69, general motors 1.20; price to sales- Ford motors 0.35, general motors 0.34; returns on assets- ford motors 1.93%, general motors 4.25%.
Its market share fell from 11.1% recorded in 2005 to 7% in 2015. The reasons for this include; stiff competition outside North America, emerging markets from Brazil, China and India has greatly affected its market share. Another consideration is on strength in commercial vehicle segment, a Ford motor has a strong influence in the commercial vehicles its major legacy being the F-series trucks (Miller, 1998).
The company activities such as innovation and technology development greatly show that they will increase the performance of the company. From the financial statements Ford motors is a potential income investment firm. However most investors think that investment in Ford motor is risky at the moment because, the USA market is faced with several problems such as increased in interest rates, off-lease vehicles filling the market and the Chines auto market is full of doubts.
- Home. (2017). Ford Corporate. Retrieved 12 December 2017, from http://corporate.ford.com/homepage.html
- Shingō, S. (2008). A study of the Toyota production system from an industrial engineering viewpoint. New York: Productivity Press.
- Connor, J. (2017). Valuation Of Ford Motor Company. Seeking Alpha. Retrieved 12 December 2017, from https://seekingalpha.com/article/4131022-valuation-ford-motor-company
- Miller, R. (1998). Selling to newly emerging markets. Westport, Conn.: Quorum.