Is Ford Motor Company (P) Trending Stock Buy Now?

Ford Motor Company (F) was recently on Zacks.com’s list of the most searched stocks. Therefore, you may want to consider some of the main factors that could affect the stock’s performance in the near future.

The company’s stock has returned -0.9% over the past month versus the -3.9% change in the Zacks S&P 500 composite. The Zacks Automotive – Domestic Industry, which is owned by Ford Motor Company, has lost 8.7% during this period. Now the key question is: Where are stocks headed in the near future?

While media releases or rumors of a substantial change in a company’s business prospects usually make the stock ‘trend’ and cause immediate price swings, there are always some underlying facts that ultimately dominate buy-and-hold decision making.

Revised Profit Estimation

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

Our analysis is basically based on how sell-side analysts covering stocks revise their earnings forecasts to take into account the latest business trends. When the earnings forecast for a company rises, the fair value for its shares also rises. And when the fair value of the stock is higher than the current market price, investors tend to buy the stock, so the price moves up. Therefore, empirical studies show a strong correlation between the revised trend of earnings estimates and short-term stock price movements.

For the current quarter, Ford Motor Company is expected to post earnings of $0.54 per share, representing a +5.9% change from last year’s quarter. Zacks Consensus Forecast has changed +0.8% over the last 30 days.

The $2.09 consensus revenue forecast for the current fiscal year shows a +31.5% year-on-year change. This forecast has changed +2.8% over the last 30 days.

For the next fiscal year, the $2.07 consensus revenue estimate represents a -0.8% change from what Ford Motor Company expected to report a year ago. Over the past month, the forecast has changed +0.6%.

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 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

Revenue Growth Projection

While revenue growth is arguably the most superior indicator of a company’s financial health, nothing happens if a business can’t increase 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 sales forecast of $38.35 billion for the current quarter represents a +15.5% year-on-year change. Estimates of $147.01 billion and $152.12 billion for the current and subsequent fiscal years show changes of +16.5% and +3.5%, respectively.

Recent Report Results and Surprise History

Ford Motor Company reported revenue of $37.91 billion in the last reported quarter, representing a +57.1% year-on-year change. EPS $0.68 for the same period compared to $0.13 last year.

Compared to the Zacks Consensus Estimate of $32.74 billion, the reported revenue represents a +15.8% surprise. Surprise EPS was +58.14%.

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

Without considering stock valuations, there is no efficient investment decision. In predicting future stock price performance, it is important to determine whether current prices properly reflect the intrinsic value of the underlying business and the company’s growth prospects.

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 ‚Äč‚Äčalone helps ensure whether its shares are fairly valued, overvalued, or undervalued, whereas comparing a company relative to its peers on these parameters provides a good understanding of how reasonable its share price is.

The Zacks Value Style Score (part of the Zacks Style Scoring system), which pays close attention to traditional and unconventional valuation metrics for grading stocks from A to F (An is better than B; a B is better than C; and so on), is quite helpful in identify whether a stock is overvalued, overvalued, or temporarily undervalued.

Ford Motor Company is given an A rating 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.

Conclusion

The facts discussed here and a lot of 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 suggests that it may perform in line with the broader market in the near term.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for Next 30 Days. Click to get this free report

Ford Motor Company (F): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investasi Investment Research

The views and opinions expressed herein are those of the author and do not necessarily reflect the views and opinions of Nasdaq, Inc.

Leave a Comment