{"id":534762,"date":"2024-07-23T13:27:41","date_gmt":"2024-07-23T17:27:41","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=534762"},"modified":"2024-07-23T11:14:18","modified_gmt":"2024-07-23T15:14:18","slug":"will-ford-stock-go-up","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/will-ford-stock-go-up","title":{"rendered":"Will Ford Stock Go Up In Next 6 Months?"},"content":{"rendered":"
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Ford Motor Company (NYSE: F<\/a>)<\/strong> has been operating for over a century and has <\/span>stamped its footprint on the US auto landscape with its array of cars and trucks, including the bestselling F-150 series and the relatively new electric models, such as the Mustang Mach-E and the F-150 Lightning.<\/span><\/p>\n

Recent efforts to transform have improved its position by 14 spots in the J. D. Power 2024 U.S. Initial Quality Study<\/a>, moving from 23rd to 9th place. As an aside, the same study names the Bronco Sport as the best small SUV for initial quality.<\/span><\/p>\n

On the flip side, Ford announced that it is decreasing EV production because the market has started to slow down. Management plans to push back production of several more EVs<\/a>, including the new, three-row electric SUVs that were originally scheduled for 2025. Instead, manufacturing will begin in 2027. <\/span><\/p>\n

Ford is also scaling back the output of the F-150 Lightning electric truck while cutting the capital expenditure for its Michigan EV battery plant project<\/a> and slashing its planned production capacity by more than 40%.<\/span><\/p>\n

Despite these changes, the leadership team expects to persist with the long-term EV plan and offer more hybrids while gradually increasing battery car manufacturing to guarantee quality as it caters to market needs.<\/span><\/p>\n

So what does the future hold for Ford and will the stock rally after a year of relatively flat performance?<\/span><\/p>\n

What Is the Ford+ Strategy?<\/span><\/h2>\n

One notable growth lever that potential shareholders can hang their hat on Ford+, but what is it?<\/p>\n

Ford+ is both a vision and strategy<\/a> to improve the company’s operational structure to meet automotive industry’s demands. In plain terms, this approach that detailed in 2021 <\/span>emphasizes electrification, connectivity, and improving experiences for consumers. If successful, the result will be several new EV models so that electric cars represent 40% of total sales by 2030.<\/span><\/p>\n

Connected services in layman’s terms means Ford expects to catch up to features Tesla already provides, such as over-the-air software updates and improved telematics. The goal, not dissimilar to Tesla, is to make car performance just one of the many attributes that drivers come to appreciate about the brand.<\/span><\/p>\n

Ford+ also has a focus on Ford Pro, the division that targets commercial clients who need fleet management solutions and telematics services for greater efficiency.<\/span><\/p>\n

Sustainability is another pillar of the Ford+ approach that aims to decrease emissions and add more eco-friendly materials to cars. The company has a goal to reach net zero carbon by 2050 and increase so this fits squarely within that target.<\/span><\/p>\n

Altogether, Ford+ is the company’s eye on the long-term with clear goals to meet the automotive industry’s push for modern transformation. Management has stated that pivotal to the Ford+ growth plan is reaffirming customer value,<\/a> an approach any Warren Buffett fan will find appealing given his preference for delighting customers.<\/span><\/p>\n

Ford Focuses On Dividends<\/span><\/h2>\n

Ford has historically been committed to shareholder returns through dividends, and its current payout of $0.78 reaffirms that by offering a yield of 5.52%.<\/span><\/p>\n

Perhaps of greater comfort to shareholders is knowing that the dividend payout ratio is just 13%, a healthy and sustainable ratio.<\/span><\/p>\n

It’s also worth mentioning that Ford has been able to maintain dividend payments in spite of market volatility, proving the company’s financial stability. <\/span><\/p>\n

So Far, So Good<\/span><\/h2>\n

In Q1 2024, management reported decent financials with a 3% year-over-year increase in revenue<\/a>, reaching $42.8 billion. <\/span><\/p>\n

Net income came in at $1.33 billion, or 33 cents per share, compared with $1.76 billion, or 44 cents per share, a year earlier. <\/span><\/p>\n

It’s worth noting that the prior quarter’s EBIT was substantially negative at almost $800 million so this marked a sharp and positive turnaround.<\/p>\n

If there were an ongoing point of concern it’s the 8.7% gross margin that leaves little room for error.<\/p>\n

Still, there are reasons to be upbeat. For example, Ford Pro revenue was $18.0 billion, a 36% increase that led to $3.0 billion in EBIT and correlated to a near 17% margin. <\/span>The growth was driven by increased production of Super Duty trucks and Transit vans. <\/span><\/p>\n

Ford Blue faced challenges due to the production ramp of the new F-150, but it saw a 36% increase in hybrid vehicle sales. Ford Model E reported an EBIT loss of $1.3 billion amid pricing pressures in the EV market.<\/span><\/p>\n

Will Ford Stock Go Up?<\/span><\/h2>\n

The consensus among 24 analysts covering Ford stock is that it will rise by about 8% to $14.27 per share. In its favor is the fact that it is trading at a low price-to-earnings ratio relative to near-term growth and pays a high dividend yield that will attract income investors.<\/p>\n

With that said, Ford is struggling with the EV market’s slow growth, which has led to cuts in new EV production and the postponement new model launches.  <\/span>A positive aspect of the stagnation is that expenses at battery plants are decreasing because of lower demand. <\/span><\/p>\n

Still, Ford faces headwinds such as inflation and elevated interest rates that continue to affect purchasing power of end customers. <\/span><\/p>\n

It’s also facing intense competition in all areas of the automotive market. It competes with other legacy car manufacturers, such as General Motors and Toyota, especially in the truck and SUV markets while in the electric vehicle market, Ford must contend with Tesla. <\/span><\/p>\n

Despite the hurdles ahead, analysts largely expect Ford to grow moderately for the foreseeable future. Revenues are expect to climb by 2% annually but the cost initiatives are forecast to cause net income to climb over the next 5 years by 12.2% annually.<\/span><\/p>\n

Overall, a discounted cash flow forecast puts fair value closer to $11 per share, so it’s hard to get to enthusiastic about the automaker at this time.<\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Ford Motor Company (NYSE: F) has been operating for over a century and has stamped its footprint on the US auto landscape with its array of cars and trucks, including the bestselling F-150 series and the relatively new electric models, such as the Mustang Mach-E and the F-150 Lightning. Recent efforts to transform have improved […]<\/p>\n","protected":false},"author":2,"featured_media":534764,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[368,1190,485,588,336],"class_list":["post-534762","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing","tag-arry","tag-cvgi","tag-f","tag-gm","tag-tsla"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2024\/07\/Untitled-design-2024-07-23T092919.071.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-2f7c","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/534762","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=534762"}],"version-history":[{"count":13,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/534762\/revisions"}],"predecessor-version":[{"id":534777,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/534762\/revisions\/534777"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/534764"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=534762"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=534762"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=534762"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}