Oil in the Engine: Improved Probability & P/E Discount
Ford Motor, the iconic American automaker, has been firing on all cylinders with its recent inclusion on the Zacks Rank #1 (Strong Buy) list. The company’s stock has roared ahead by a notable 9% year-to-date, having crossed above its 200-day moving average and showcasing a bullish pattern. Ford’s relentless focus on bolstering profitability pre-pandemic bore fruit when the dust settled on supply chain disruptions, propelling the company to achieve multi-year EPS peaks of $2.01 per share last year. Although a slight slowdown in Ford’s bottom line growth is anticipated, recent earnings estimate revisions for both FY24 and FY25 paint a positive picture for investors.
Shining in the Sales Lot: P/S Discount
When it comes to valuation metrics, Ford’s stock remains a compelling buy. Trading at $13 and a mere 6.9X forward earnings, the stock stands at a substantial 58% discount compared to its decade-long high of 16.5X forward earnings, presenting an attractive investment opportunity. Ford’s current valuation also undercuts the Zacks Automotive-Domestic Industry average of 15.3X and edges past its primary rival, General Motors (GM), which trades at 7.6X. Additionally, Ford’s price to sales ratio of 0.31X, in line with GM’s 0.29X, positions the stock favorably below the industry average of 1.5X, indicating room for growth.
Powered Up: EV Surge
The electric vehicle (EV) segment has been a standout performer for Ford, with a remarkable 27% surge in EV sales reported in the last quarter – hitting record highs with 25,927 all-electric vehicles delivered. Demand for Ford’s electric models including the Mustang Mack-E, F-150 Lightening, and E-Transit has been on the rise, surpassing expectations. These impressive figures propelled Ford’s Q4 sales to $43.3 billion, exceeding estimates by 14% in early February. Furthermore, earnings per share stood at $0.29, smashing the Zacks Consensus of $0.12 per share by 141%. Notably, Ford reported an 81% surge in EV sales the following month, delivering 6,368 units, a trajectory set to bolster Q1 results in April.
Final Lap: Bottom Line
As Ford’s stock accelerates, driven by its appealing valuation and robust EV sales, investors are presented with a golden opportunity to capitalize on the company’s growth potential. The current trajectory suggests that now could be an optimal moment to invest, as Ford’s promising outlook promises lucrative returns in the coming year.