Are Ford Motor Company (F)’s Most Watched Stock Worth Betting Now?

Ford Motor Company (F) is one of the most watched stocks of Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect a stock’s short-term performance.

The company’s stock has returned -5.6% over the past month versus the -2.3% composite change of the Zacks S&P 500. Zacks Automotive – The domestic industry, which is owned by Ford Motor Company, has lost 10.1% during this period. Now the key question is: Where are stocks headed in the near future?

While media reports or rumors of significant changes in a company’s business prospects usually cause its stock to trend and cause an immediate price change, there are always certain fundamental factors that ultimately drive the buy and hold decision.

Revised Revenue Estimation

Here at Zacks, we prioritize assessing changes in the company’s future earnings projections above anything else. That’s because we believe the present value of future income streams is what determines the fair value for the shares.

We basically see how sell-side analysts covering stocks revise their earnings forecasts to reflect the impact of the latest business trends. And if earnings forecasts go up for a company, the fair value for its shares goes up. A fair value that is higher than the current market price encourages investors to buy the stock, which causes the price to move higher. This is why empirical research shows a strong correlation between the revised trend of earnings estimates and short-term stock price movements.

Ford Motor Company is expected to post earnings of $0.44 per share for the current quarter, representing a +238.5% year-on-year change. Over the past 30 days, the Zacks Consensus Forecast has changed -3.3%.

For the current fiscal year, the consensus revenue estimate of $1.92 represents a +20.8% change from a year earlier. Over the past 30 days, this forecast has changed by -2.3%.

For the next fiscal year, the $2.08 consensus revenue estimate represents a +8.3% change from what Ford Motor Company expected to report a year ago. Over the past month, the forecast has changed +177.8%.

With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rating — is a more convincing indicator of a stock’s near-term price performance, as it effectively leverages the revised power of earnings estimates. The magnitude of the recent change in consensus estimates, together with three other factors related to the estimated earnings, has resulted in a Zacks Rank #3 (Hold) for Ford Motor Company.

The chart below shows the evolution of the company’s next 12 months consensus EPS estimates:

EPS 12 Months

12 months consensus EPS forecast for F _12MonthEPSChartUrl

Income Growth Forecast

While revenue growth is arguably the most superior indicator of a company’s financial health, nothing happens if a business is unable to grow its revenue. After all, it is almost impossible for a company to increase its revenue for a long time without increasing its revenue. So, it is important to know the company’s revenue growth potential.

In the case of Ford Motor Company, the consensus estimate of sales of $34.26 billion for the current quarter represents a +42% year-on-year change. Estimates of $143.9 billion and $151.51 billion for the current and next fiscal years show changes of +14% and +5.3%, respectively.

Recent Report Results and Surprise History

Ford Motor Company reported revenue of $32.11 billion in the last reported quarter, representing a year-over-year change of -4.3%. EPS $0.38 for the same period compared to $0.89 last year.

Compared to the Zacks Consensus Estimate of $30.39 billion, the reported revenue represents a +5.65% surprise. EPS shock is -2.56%.

Over the past four quarters, Ford Motor Company has exceeded the consensus EPS estimate twice. The company exceeded consensus revenue forecasts each time during this period.

Evaluation

There is no efficient investment decision without considering stock valuation. Whether the current stock price properly reflects the intrinsic value of the underlying business and the company’s growth prospects is an important determinant of future price performance.

Comparing multiples of a company’s current valuation, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with historical values ​​alone helps ensure whether its shares are fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters provides a good understanding of how reasonable its share price is.

As part of the Zacks Style Score system, the Zacks Value Style Score (which evaluates traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), thus helping in identifying whether a stock is overvalued, overvalued, or temporarily undervalued.

Ford Motor Company is given an A on this front, indicating that it is trading at a discount to its peers. Click here to see the value of some of the scoring metrics that have driven this value.

The main thing is

The facts discussed here and much of the other information on Zacks.com can help determine whether or not to pay attention to the market buzz about Ford Motor Company. However, Zacks Rank #3 shows that it could work with a wider market in the near future.

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