Ford Motor Company (F, Financial) shares dropped by 9.01% today following the latest earnings report. Despite surpassing analyst expectations with an adjusted profit of $0.49 per share and revenues of $46.2 billion, a significant $1 billion charge related to its Model e electric vehicles affected overall net income, bringing it down to $0.22 per share—a 27% decline from the previous year.
The current stock price for Ford (F, Financial) is $10.35. In terms of valuation, Ford is considered "Modestly Undervalued" based on its GF Value, which stands at $14.42. The stock's price-to-earnings (P/E) ratio is 10.78, which is slightly lower than the industry median of 11.52. For more details, see Ford's GF Value.
Analyzing Ford's financial health reveals a few concerns. The Altman Z-Score of 1.06 indicates a distress zone, suggesting a possible bankruptcy risk within the next two years. Additionally, the company's continued issuance of new debt over the past three years, with $7.4 billion added, puts its financial strength into question. Ford's long-term debt to equity ratio is currently at 3.51, reflecting high leverage compared to industry standards.
However, there are positive signs too. Ford reported a free cash flow per share of $1.31 and a cash flow growth rate over the past year of 9.2%. Its dividend yield stands at 5.79%, providing a steady income stream for investors.
Ford continues to face challenges within its operational divisions. While the Ford Blue division's sales increased by 3% year-over-year, the drop in Model 3 sales by 33% is a concern. Conversely, Ford Pro showed impressive growth with a 13% increase in sales and improved profit margins.
Going forward, Ford has provided guidance for $10 billion in operating profits for the year, with an adjusted free cash flow projection of $8 billion. This optimistic outlook suggests potential for recovery, provided the company can effectively manage its debt and division-specific challenges.
