Ford Motor Company (NYSE: F), which emerged to compete in the era of intelligent cars and renewable energy, started the new decade with hope. The carmaker is actively investing in new technology to stay up with developments in autonomous driving, ride-hailing, and electric vehicles. Does all that work, though, make Ford Motor Company shares a good investment at the moment?
To quote, Ford Motor Company was viewed as having lost its 0 seconds of 16 seconds during Hackett’s leadership.
The Mustang Mach-debut E’s in November 2019 marked a significant turning point in the business’s shift toward what it dubbed “the digital future.” In the latter half of 2020, the Ford Mustang Mach-E, an all-electric crossover, had its public premiere in the United States. Ford Motor Company is starting manufacturing the Mach-E, a vehicle that competes with the Model Y from Tesla (TSLA) in China.
And Ford didn’t stop there; it had already started shipping the all-electric F-150 Lightning truck.
Ford’s investment in electrification aided the company’s share price growth of 140% in 2021. Ford momentarily outperformed General Motors (GM) in terms of market capitalization for the first time in five years. But what is Ford’s current position? First, assess the fundamental and technical picture if you’re considering purchasing shares.
Earnings news for Ford Motor Company
On September 20, Ford Motor Company shares fell due to a revision to its Q3 projection. As long as supply issues persist, the car industry behemoth warned that Q3 earnings would be far lower than anticipated. Due to the rise in input prices, Ford Motor Company anticipates $1 billion in higher supplier expenses than expected. Thousands of unfinished automobiles will also be present because of supply-chain issues.
However, the business kept its full-year forecast unchanged since they anticipate completing and selling the partly constructed automobiles in Q4.
On July 27, Ford’s Q2 results were a rout. Earnings for the carmaker increased by 423% to 68 cents per share. Revenue increased by 50% to $40.19 billion, considerably above rivals. A 35% rise in wholesale shipments, together with favorable pricing and vehicle mix, was what caused that increase.
Despite supply chain challenges and inflation, Ford Motor Company had robust demand for its internal combustion and electric car lineups. The carmaker had $29 billion in cash at the end of the quarter and has $45 billion available to support its EV and other growth efforts.
Ford Motor Company didn’t change its yearly forecast on Wednesday. Executives forecast an adjusted EBIT of $11.5 billion to $12.5 billion for the 2022 fiscal year, up 15% to 25% from the previous year. These figures are predicated on ongoing reasonable pricing and a 10%–15% increase in car sales. The management anticipates a $3 billion increase in total costs for the year. This amount is $1 billion higher than the previous quarter.
Analysts, however, are skeptical that Ford Motor Company will be able to achieve its full-year goals in the wake of its Q3 warnings.
July Sales
Due to a spike in interest in EVs, Ford’s auto sales increased in August. Last month, 158,088 automobiles were sold in the US. This boost is 27% compared to the 4.8% growth in industry sales.
According to the company, EV sales have increased four-fold from a year ago. Ford’s sales have grown due to interest in the new all-electric F-150. The new truck, whose deliveries started in June, turns around in the shortest amount of time among Ford’s lineup—just eight days. In August, the Detroit-based carmaker sold 58,283 F-series trucks. With 7,302 vehicles sold in August, sales of Ford Motor Company hybrid models also set a new high. The rise is 9% over the previous year.
Increased Costs for the Electric F-150
Ford’s well-liked all-electric vehicle will soon cost more. For the 2023 model year, the carmaker said on August 9 that pricing for the F-150 Lightning model would rise by as much as $8,500. Ford Motor Company attributed the price increases to the rising cost of the components used to make well-liked EV vehicles.
The truck was initially intended to compete with the Tesla Model 3 car, which has a suggested retail price of $48,000. The Cybertruck won’t go into production by the Elon Musk-led automaker until at least 2023.
In late May, Ford Motor Company made the proper delivery of its first electric pickup truck. When the F-150 Lightning variant was initially introduced in April, 200,000 reservations were made. The introduction of the F-150 Lightning was seen as a turning point in Ford’s comeback. The carmaker has poured billions of dollars into switching to the production of electric vehicles.
Ford said in March that as part of a significant corporate restructuring, the firm would separate its electric vehicle and gas engine businesses. The Wall Street Journal stated that both businesses would remain internal, “with distinct identities, and their own leadership structures and profit-and-loss accounts.”
Ford will cut jobs to pay for EV investments.
Ford intends to eliminate 8,000 jobs to pay for EV investments. According to Bloomberg, Ford’s internal combustion engine will account for most of those reductions. Following the revelation, Ford shares increased on July 21 as the company unveiled several initiatives to meet its lofty production goals. Ford verified that it had acquired 100% of the battery cell capacity required to achieve its annual objective of 600,000 electrified vehicles globally by late 2023, in addition to the anticipated labor reductions.
Ford announced plans to invest $3.7 billion to increase the manufacture of gas- and electric-powered vehicles in June. Upgrades and retooling will be done in Michigan, Ohio, and Missouri. Ford’s investment will create 6,200 union manufacturing jobs.
Ford’s rising commitment to electric vehicles is reflected in the Detroit automaker’s most recent expenditure to increase EV manufacturing. Ford and Volkswagen (VWAGY) renewed their agreement mid-March, doubling the number of electric vehicles produced in Europe to 1.2 million by 2023. The automaker also established initial agreements for the construction of an EV battery facility in Turkey with SK Battery and Koc Holding.
Ford increased its EV expenditure target by $20 billion in February. The $30 billion that Ford has already set aside for electric vehicles through 2025 was raised by this investment. The division of the company’s EV and gas segments came after such investments. The increasing expenditures in the EV market coincide with Ford electric vehicle sales, which are on the rise. Due to excessive demand, the business had to stop taking orders for its hybrid 2022 Maverick pickup vehicle. In the summer, orders for the 2023 Maverick will start again.
Fundamental Analysis of Ford Motor Company Stock
Fundamental and technical research is crucial in deciding whether Ford stock is a good buy.
According to the IBD Stock Checkup tool, Ford Motor Company stock has an IBD Composite Rating of 60 out of a possible 99. Regarding the most crucial fundamental and technical stock-picking criteria, it continues to be much below the top tier of 90-plus rated leaders.
The poor EPS Rating for Ford stock is 50 out of 99. The rating contrasts the growth of earnings-per-share on a quarterly and yearly basis with all other equities. Ford, currently in transition, has a patchy history of financial success. Over the previous ten years, the corporation has recorded more quarterly profit drops than its fair share. Estimates, however, indicate an increase.
Among its competitors in the automobile business, IBD ranks the automaker third. Out of the 197 industry groups monitored by IBD, the automaker’s category is rated No. 72. The best stocks to concentrate on are those in the top 40 IBD groupings.
Technical Analysis of the Ford Motor Company Stock
In 2021, Ford Motor Company shares increased 140%, reaching a record high in early January. However, since then, shares have dropped considerably, reaching a 52-week low on June 17.
On July 19, on the heels of news about EV batteries, the stock price rose above its sloping 10-week line. Since January, Ford shares have not risen above that crucial support level until that point. After Ford shares increased further on July 27, it exceeded Q2 earnings projections.
However, following its earnings gap-up on July 28, the Ford stock has lost all of its gains. In August, shares encountered resistance near the 200-day moving average, much like the S&P 500. After the firm warned on September 20 that Q3 earnings would be lower than anticipated, Ford shares continued to decline and eventually closed below its 50-day moving average.
Think about Ford’s Strength Relative
Ford’s relative strength line, which gauges a stock’s price performance concerning the S&P 500, has dramatically declined after it spiked upward at the beginning of 2022.
According to IBD’s analysis, it’s critical to concentrate on equities that beat the market.
Buy Ford Motor Company Stock Right Now?
The price of Ford shares soared in 2021 and into the new year, but it plunged after the most recent market slump. While EV sales and hybrids are exploding from a still-low base, overall production is rising as supply-chain issues improve.
Overall, it’s not a good time to purchase Ford shares.
Before they seem actionable, shares need to rise above their 50-day/10-week and 200-day/40-week lines.
Visit IBD’s Stock Lists page to identify the finest stocks to purchase and watch. Our Leaderboard and MarketSmith programs also offer further stock recommendations.
Featured Image: Megapixl © Ynamaku
Author Valerie Remorosa