Report Cards for Automakers – Ford (F)
Despite reporting a first-quarter earnings miss last month, there are several things to like about Ford stock.
Ford still is on track to deliver pre-tax earnings of between $7 billion and $8 billion for the full year. Ford’s Europe operations, which have been a quagmire for the automaker for the past several quarters, are beginning to cut losses and position it for sales growth. The automaker turned a loss in the Asia-Pacific region into a $291 million profit — China operations were particularly strong.
Meanwhile, Ford stock sports a price/earnings-to-growth ratio of less than 1 (indicating it’s undervalued), and its forward P/E of 8.4 is also attractive. It’s also hard not to like Ford’s 3.7% current dividend yield, and plans to buy back $1.8 billion in stock underscore the company’s commitment to shareholder value.
One potential headwind: On July 1, turnaround architect Alan Mulally will hand off the top job to his handpicked successor, Mark Fields. Fields will provide continuity of leadership, but expect Ford stock to lose some lift this summer due to the transition.