Ford Motor Company Shares Rise At A Rate Of 138 Percent

Rancakmedia.com – Still a good time to buy Ford Motor Company stock. In May 2020, Ford Motor F +11.7 percent Company shares hit a low of $4.90 per share.

Since then, the stock has soared at a compound annual rate of 138 percent to $23.17 in January 4 trading. Indeed, Ford overtook Tesla as the auto sector stock that rose the most in 2021.

Is a good idea to invest in share this? Declining Ford sales is one argument in its favor, as is increasing demand for its electric pickup, the F-150.

Another argument is that the company is undervalued compared to its EV competitors. Nevertheless, stocks will continue to rise if Ford grows faster than modest expectations. This essay contains references to financial instruments in which I do not own a personal stake.

The Ford Motor Company's Stock Price Rise

The Ford Motor Company's Stock Price Rise

Stock price Ford grew 140% in 2021, outpacing Tesla's 50% gain. Investors have been pleased with Jim Farley's performance since he was appointed CEO in October 2020.

Two things that stand out are Farley's promise to communicate more transparently with investors and his shifting of resources into the EV industry – especially the upcoming Lightning F-150 truck.

3 Developments Driving Ford Motor Company's Stock Price Up

  1. December 10, 2021 (stock up 9.6 percent). (shares up 9.6 percent). Farley revealed that Ford will triple production of the electrified Mustang Mach-E to more than 200,000 cars a year for North America and Europe by 2023. Ford has ended orders for the F-150 Lightning at 200,000, he had announced the day before.
  2. October 28, 2021 (+8.7 percent ). After releasing EPS that more than quadrupled analyst earnings, Ford raised its full-year forecast.
  3. 26 May 2021 (up 8.5%). Ford+'s recovery strategy was detailed in full during the company's investor day.

That massive surge in Ford stock continues into 2022. Ford shares were up 7 percent in the early session after announcing an increase in EV production.

“Nearly tripled production of the all-electric F-150 Lightning pickup at the Dearborn, Michigan plant to 150,000 vehicles per year to meet 'surging consumer demand,'” Ford told MarketWatch on Jan. 4, according to the publication.

Third Quarter Report That Beat Ford Motor Company Expectations

Ford's latest financial report topped Wall Street expectations for full-year auto sales, revenue and demand.

On Oct. 27, CNBC said that “Ford has narrowly topped Wall Street's earnings expectations and slightly topped sales projections for the third quarter. [Ford raised] its annual forecast for the second time [in 2021]. Ford reported better-than-expected profitability in the third quarter, citing increased access to semiconductor chips and greater vehicle sales.

Ford's automotive sales of $33.21 billion exceeded forecasts of $670 million, despite a 4.85% decline in third quarter revenue. Adjusted EPS of 51 cents was 89 percent more than experts had projected.

Having previously forecast adjusted revenue of between $9 billion and $10 billion, Ford now expects adjusted revenue for the entire year to be between $10.5 billion and $11.5 billion.

CFO John Lawler said Ford "expects a 10 percent increase in wholesale car volumes in 2022 compared to this year, as semiconductor shortages continue to affect business," according to CNBC.

Ford's Low Rating Compared to EV Rivals

Ford is likely to be more appreciated by investors if it can beat its growth expectations.

How? Tesla and other EV competitors score higher than Ford, even though Ford has the largest P/E ratio of any of its competitors.

Here's how Ford's P/E lined up relative to its incumbents, according to the Wall Street Journal:

  • Fords: 30.04
  • Toyota: 10.00
  • GMs: 8.17
  • Volkswagens: 7.74

To compare Ford's value to its EV contemporaries, I use the price/sales ratio because most of them have no revenue. On that perspective, Ford's stock is quite affordable. According to Morningstar, here's what you might expect to pay:

  • Tesla: 29.10
  • Nio: 9.90
  • Ford: 0.65

Tesla recently revealed the 87%'s increase in unit volume in the fourth quarter of 2021, so it's safe to say that.

What will it take to keep Ford's stock up? According to the FactSet consensus of 22 analysts, the stock is expected to increase at a long-term rate of 67.8%.

Getting there hinges on whether it can accelerate its EV ambitions and generate an 8 percent “adjusted profit margin before interest and taxes by 2023,” said CNBC.

If Ford's overall earnings can increase due to increased sales of EVs, investors can start to deliver a much higher price/sales ratio. As a result, Ford stock would be an excellent investment.

Conclusion

Ford Motor Company shares are up 138% since May 2020. Ford overtook Tesla as the auto sector stock to gain the most in 2021.

The company's declining sales are one argument in its favor, as is the growing demand for its electric pickups. , F-150.

Ford's automotive sales of $33.21 billion exceeded forecasts of $670 million, despite a 4.85% decline in third quarter revenue. CFO John Lawler said Ford "expects a 10 percent increase in wholesale car volumes in 2022 compared to this year".

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