Ford (F) is a valuable asset for investors looking to weather the global economic volatility. Considering all available options, this also may be the most appealing auto manufacturer to invest in right now. The current price is acceptable for favorable returns, although there will most likely be an opportunity to invest in Ford at even more of a discount in the near future. I believe Ford will experience some short-term dips in price in the near-term, but in the long-run, this stock price has the potential to triple or even quadruple from its current price within the next few years. Shareholders should hold for the long-term. Investors and shareholders alike should watch closely for more appealing entry points to acquire this stock at even more of a discount after the next earnings report. Ford still has a reliable and aggressive plan for growth and prominence in the auto-industry to sustain long-term success.
Ford's sales growth has decreased by over six percent from the previous quarter, but sales growth is only down by around two percent from the previous year. Ford's beta is over two, while its PEG ratio is slightly under one. These two statistics indicate that Ford still has strong growth potential, both in the company and the stock price. The current price is less than seven times earnings; this rate is a marginal increase from the trailing 12 month price of over five times earnings. Ford's return on equity had decreased by nearly 50 percent from the end of 2011 to the end of Q1 2012. Ford's operating margin and net margin decreased by less than one percent from the end of 2011 through the end of Q1 2012. The current ratio and quick ratio are very close and have been stable from 2011 to Q1 2012; they are both slightly less than two. Ford's price to sales ratio is less than 0.5, while its debt to equity ratio has decreased, but is still more than six.
Ford's dividend yield is around 2.1 percent. This equates to an annual rate of $0.20. Ford's dividend yield is around three times more than the industry average. The trailing 12 month price to earnings ratio is only slightly more than the industry average. Ford's price to book ratio is marginally less than the industry average. Ford's trailing 12 month net profit margin is around 14 percent, while the trailing 12 month return for equity is around 63 percent. Ford's projected growth rate for next year and the next five years is a little more than half the industry average. In light of the favorable dividend yield and adequate price ratios, shareholders view Ford as a long-term defensive asset in the portfolio that has potential for significant capital appreciation by 2016 and beyond.
Ford recently warned in a regulatory filing that international losses will be quite substantial compared to last quarter. In the previous quarter, Ford lost around $190 million overseas, in the next earnings report for the current quarter, losses could be around $570 million. This loss is more than double the figures analysts had originally estimated. The main catalyst for the international loss in earnings is the financial crisis in Europe. The lack of demand is also affecting other auto makers like GM (GM). Increased tariffs and competition in the Latin American markers has also hampered earnings. Ford's recent and ongoing investments in the Asian markets have also added to the loss of over $500 million in Q2 2012.
This warning has caused Ford's stock price to drop recently, although most analysts remain confident in Ford's long-term projections for increased earnings. The latest announcement has created advantageous entry points to buy stock in Ford for less than the steady $10 per share price seen in the first half of 2012. Ford's stock price may rebound or drop further with the next earnings report, so interested investors should act now or watch the market closely for dips in the stock price throughout the remainder of the summer. Ford can minimize its exposure in Europe and level out production beyond the current 63 percent threshold in order to better coincide with current demand. The investments in the Asian markets will also turn from a loss into additional revenue and market share in due time. Shareholders should hold onto this stock because there are far more positive statistics that paint a promising picture of Ford's future into 2013 throughout the next few years.
In contrast, Ford's numbers in North America over the past few months have been more than impressive. May and June were great months for selling Ford vehicles. In May's monthly sales call, Ford showed truck sales increased by 21 percent, while Econoline was up by 31 percent. This was the best month for Econoline since 2008. Sales for the F-series were up 29 percent year-over-year; the best month for the F-series since May 2007. F-150 Ecoboost vehicles sales were up by over 153 percent. Utility sales were also up by 12 percent year-over-year. June was an even better month for Ford. Ford's sales were up year-to-date through June and year-over year by around seven percent. Ford Escape sales increased by 28 percent; this was its best month ever. Fusion sales increased by 17 percent, this was its best June ever. Explorer sales increased by 35 percent in June and by 15 percent, year-to-date. The F-Series had its best month in five years; it was America's top selling vehicle for the first half of 2012. Year-to-date through June, sales for cars increased by 3 percent, while trucks and utilities increased by 9 percent each.
Ford is doubling the number of vehicles capable of 40 mpg since 2011. It will have more of these vehicles than Honda (HMC), Toyota (TM) or any other automaker next year. Ford will have six electrified vehicles on the market in 2013. Its new CMAX hybrid will average more than 3 mpg more than Toyota's Prius. Ford will equip over 1.5 million cars with Ecoboost by 2013; these newer engines drastically improve fuel performance over previous models and competitors' vehicles as well. The Escape with Ecoboost saves over $2000 in fuel annually compared to the Toyota's Rav4. The Ecoboost Fusion saves over $1500 annually in fuel compared to the Camry. Ford is consolidating and focusing its efforts to create more efficient and economic vehicles. Ford is also focused on improving the available technologies like lightweight carbon fiber material from Dow Chemical (DOW).
Ford has an aggressive marketing campaign planned for the 2013 Fusion led by spokesperson celebrity Ryan Seacrest. The Fusion has a variety of hybrid powertrain choices and innovative technological accessories for consumers, and Ford plans to market this in a variety of media outlets throughout the year. Ford is steadily improving its market share in North America and around the world in lucrative markets like Asia. Shareholders and investors should buy Ford at a discount now and hold it as long as possible for substantial returns for the next few years.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.