Ford Motor Co. manufactures automobiles under its Ford and Lincoln brands. In March 2022, the company announced that it will run its combustion engine business, Ford Blue, and its BEV business, Ford Model e, as separate businesses but still all under Ford Motor. The company has nearly 13% market share in the United States, about 10% share in the UK, and under 2% share in China including unconsolidated affiliates. Sales in the US made up about 68% of 2024 total company revenue. Ford has about 171,000 employees, including about 56,500 UAW employees, and is based in Dearborn, Michigan.
With a market capitalization of $46.68 billion, Ford operates within the consumer cyclical sector, specifically in the vehicles and parts industry. The company’s strategic positioning is crucial as it navigates the competitive automotive landscape.
Financial Health Analysis
Ford’s financial performance presents a mixed picture:
- Revenue Growth: Ford reported a 3-year revenue growth of 10.8%, indicating a steady increase in sales.
- Profitability Margins: The company’s net margin stands at 1.7%, while the gross margin is 7.19%, reflecting challenges in maintaining profitability.
- Balance Sheet Strength: Ford’s debt-to-equity ratio is 3.56, indicating a high level of leverage, which could pose risks if not managed effectively.
- Warning Signs: The Altman Z-Score of 1.01 places Ford in the distress zone, suggesting potential financial instability.
Valuation & Market Sentiment
Ford’s valuation metrics provide insight into its market positioning:
- Valuation Ratios: The P/E ratio is 15.04, close to its 2-year high, while the P/S ratio is 0.25, indicating a relatively low valuation compared to sales.
- Analyst Targets: The target price is set at $10.87, reflecting cautious optimism among analysts.
- Technical Indicators: The RSI (14) is 55.01, suggesting a neutral market sentiment.
- Ownership: Institutional ownership stands at 61.63%, indicating strong interest from large investors, while insider ownership is relatively low at 0.99%.
Risk Assessment
Ford’s risk profile is shaped by several factors:
- Financial Health Grades: The Beneish M-Score of -2.62 suggests that Ford is unlikely to be a financial manipulator.
- Sector-Specific Risks: As a cyclical company, Ford is exposed to economic fluctuations that can impact demand for vehicles.
- Volatility and Beta: With a beta of 1.84, Ford’s stock is more volatile than the market, reflecting higher risk.
- Upcoming Catalysts: Investors should monitor upcoming earnings reports and strategic initiatives that could influence Ford’s financial trajectory.
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