Some folks might get distracted by the slew of electric vehicle stocks out there. Yet, let us give due respect to an icon among U.S. automakers, Ford Motor (NYSE:F). While we’re at it, we should acknowledge that the bull case for Ford stock is surprisingly strong.
With a pledge to become carbon neutral by 2050, Ford is proving itself to be a forward-thinking company. This isn’t the old-fashioned automaker that your grandfather might have invested in.
The times are changing, and so is Ford. And with an earnings event scheduled to take place on Feb. 4, current and prospective F stock investors have a big decision to make.
Is it time to get off at the nearest stop, or stay on for the ride? Put on your seat belt and we’ll head down that road, starting with the recent price action of F stock.
Ford Stock at a Glance
It might be hard to imagine this now, but less than a year ago, there was a point at which F stock traded below $4 per share. That was in March, when it felt like the automotive market would never recover.
Of course, we now know that the world didn’t end and Ford stock staged a spectacular recovery. By the end of January, the share price was easily above $10.
What’s noteworthy is the steadiness with which the buyers ramped the Ford stock price from $4 to $10. It was essentially a straight line starting in mid-March, which just goes to show that the share-price turnaround has been orderly and consistent.
As a company, Ford has outlasted numerous crises. The turnaround in the F stock price is proof positive that the company will be down sometimes but should never be counted out.
Wall Street’s Short Memory
It’s funny how brief people’s attention spans can be, especially in the financial analyst community.
It was only three months ago when Ford absolutely blew away Wall Street’s earnings expectations. It was Ford’s shining moment as the company posted third-quarter results that should impress even the staunchest critics:
- Adjusted earnings per share of 65 cents, easily beating the expected 19 cents per share
- $34.71 billion in automotive revenues, versus the Wall Street prediction of $33.51 billion
- Net profits of $2.34 billion, which marked a 22% year-over-year gain
- A 35% share for Ford’s F-series trucks in the U.S. market
- An increase of 22% in product shipments to China
- Ford Credit’s best performance in 15 years
- Ended the quarter with nearly $30 billion in cash and total liquidity of over $45 billion
With results of that caliber, you’d think that the analysts would significantly raise their fourth-quarter projections for Ford.
Yet, Wall Street’s expectations are surprisingly muted. Specifically, the analysts are preparing for Ford to lose 9 cents per share on quarterly revenues of $33.3 billion.
Bold Moves
Those figures seem quite beat-able, and low expectations could lead to a nice earnings-event surprise. And if you’re already invested in F stock for the long term, there’s no compelling reason to dump your shares as a pre-earnings precaution.
J.P. Morgan analyst Ryan Brinkman certainly doesn’t seem to be panicking as the event approaches. He recently upgraded his rating on F stock from “neutral” to “overweight” (which is similar to a “buy” rating).
Furthermore, Brinkman established an ambitious price target of $14 to F stock.
I already alluded to Ford’s willingness to venture into new areas of the automotive field. Brinkman evidently sees what I’m seeing as Ford is making “bold moves” to “right-size its international operations, including most recently in South America.”
These moves will, according to Brinkman, “free up capital for use in initiatives investors are likely to reward more, such as its electrification and autonomous efforts.”
This type of boldness should stand Ford and its stakeholders in good stead in a time when regulatory and consumer preferences are changing rapidly in the automotive market.
The Takeaway
Suffice it to say that Ford is a bolder company than some traders give it credit for.
And with that boldness comes the promise of progress, along with a potential earnings beat and higher prices in F stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
