With a day's loss of -2.16%, a 3-month gain of 7.04%, and Earnings Per Share (EPS) (EPS) of 1.02, the question arises: is Ford Motor Co (F, Financial) modestly undervalued? This article aims to answer this question through a comprehensive valuation analysis of the company. Read on to delve into the financial details and understand the value of Ford Motor Co (F).
Introduction to Ford Motor Co
Ford Motor Co, known for manufacturing automobiles under its Ford and Lincoln brands, holds a significant market presence. With approximately 13% market share in the United States, 6.5% in Europe, and 2.1% in China, the company is expected to increase its market share as inventory improves post the chip shortage. About 67% of the company's total revenue in 2022 came from U.S. sales. Ford Motor Co, based in Dearborn, Michigan, employs around 173,000 individuals, including about 57,000 UAW employees.
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally trade. If the stock price is significantly above the GF Value Line, it is considered overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, it is potentially undervalued and may offer higher future returns.
As per GuruFocus' valuation method, Ford Motor Co (F, Financial) is estimated to be modestly undervalued. The stock's current price is $12.46 per share, with a market cap of $49.80 billion. Given its undervaluation, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength and Profitability
Companies with poor financial strength pose a high risk of permanent capital loss. Ford Motor Co has a cash-to-debt ratio of 0.3, ranking worse than 66.03% of companies in the Vehicles & Parts industry. The overall financial strength of Ford Motor Co is 4 out of 10, indicating it is relatively weak.
Investing in profitable companies, particularly those with consistent profitability over the long term, is less risky. Ford Motor Co has been profitable 8 out of the past 10 years. With an operating margin of 7.47%, it ranks better than 69.08% of companies in the Vehicles & Parts industry. Overall, the profitability of Ford Motor Co is fair, ranked 6 out of 10.
Growth Prospects
Growth is a crucial factor in a company's valuation. Ford Motor Co's 3-year average annual revenue growth is 0.4%, ranking worse than 68.92% of companies in the Vehicles & Parts industry. Its 3-year average EBITDA growth rate is -15.1%, ranking worse than 84.34% of companies in the Vehicles & Parts industry.
ROIC vs WACC
Another measure of a company's profitability is the comparison of its return on invested capital (ROIC) and the weighted average cost of capital (WACC). Ford Motor Co's ROIC is 5.41, and its WACC is 7.17.
Conclusion
In conclusion, the stock of Ford Motor Co (F, Financial) is estimated to be modestly undervalued. The company's financial condition is poor, and its profitability is fair. Its growth ranks worse than 84.34% of companies in the Vehicles & Parts industry. For more insights into Ford Motor Co stock, check out its 30-Year Financials here.
To find high-quality companies that may deliver above-average returns, visit GuruFocus High Quality Low Capex Screener.
