Shares of Ford Motor (NYSE:F) lost some ground after the company reported first-quarter earnings on April 28. The company posted non-GAAP earnings per share loss. Revenue slumped by 15.8% year-over-year, sending F stock back below $5.00 last week.

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Why should investors look past the poor numbers and beyond the near-term slowdown?

Ford posted a $2.2 billion negative adjusted free cash flow in the first quarter. It lost 23 cents a share after revenue fell by $6 billion to $34 billion. Ford estimated that the impact of Covid-19 on EBIT of at least $2 billion.

This month, the company is anxious to have a phased plan of getting staff back to work. The restart, with safety protocols in place, may minimize the risk of staff infections of the coronavirus.

Rushing to get people back to work might not benefit Ford. The company said on its conference call that, “We went from a 1,000 people who work remotely from home to more than 60,000. And we’ve had terrific productivity in the face of this unforeseen challenge, including our team in China which preceded the economic closure around the world.”

So if the company already mobilized its team to work remotely and demand for automobiles will lag, Ford should not hurry to bring staff back.

F Stock and the Future

Ford readied its sales process to deliver a vehicle to the customer without physical contact. So, as the world slowly restarts businesses, customers will not have any fear of going to a Ford location.

Eventually, Ford’s inventory will draw down as sales improve. Already, the company plans to re-start such operations in Europe, then full production globally in the next few months.

Ford has many new product refreshes that will interest its customers. Its re-designed F-150 is the first hybrid-electric truck. And in the next three years, 10 of its vehicle launches. For example, Ford’s Lincoln Corsair is a plug-in hybrid. The bad news is that it is canceling the Lincoln electric vehicle program with Rivian.

The company will unveil a new Bronco Brand next year. Of course, the Mustang Mach-E full-electric should find strong initial success. The SUV will offer enough cargo room for families while appealing to the Mustang fan base.

Ford ended the quarter with $35 billion. This will give the company enough liquidity to take the business through to the end of the year. Since the chances are good that the world will find a way to contain the virus’ spread, a phased re-start will lift Ford sales. This lowers the odds of Ford needing to draw down its credit line after the end of the year.

Risks on Investing in Ford

Ford burned through around $2.2 billion in adjusted free cash flow in the last quarter. This is due to lower Ford Credit distributions and adverse working capital. If the March production suspension is a one-time event, its cash flow will turn positive when it restores payables.

Ford also posted a 21% drop in wholesale unit sales of 1.1 million. Q2 unit sales will worsen but are potentially offset by dealerships reopening in the period.

At a forward P/E of 9 times, Ford scores a 91/100 on the value on Stock Rover. Still, the stock trades close to fair value. It will need to post consistently improving sales in the one- to three-year period:

Data Courtesy of Stock Rover

On Wall Street, analysts downgraded Ford, which looks more like a reaction. Here are the most recent ratings on the stock:

The average price target is still $6.33 (per Tipranks). Should the sales drop reverse sooner, so too will shares of Ford to the upside.

Disclosure: the author owns shares of Ford.