Seeking Alpha

Deutsche Bank downgrades Ford (F) to Hold on a valuation call after shares ran up past $14. The...

Deutsche Bank downgrades Ford (F) to Hold on a valuation call after shares ran up past $14. The firm thinks Ford could see a tough pricing environment in certain segments and expectations could slip. F -1.3% premarket.
Comments (20)
  • johnlewis319
    , contributor
    Comments (79) | Send Message
     
    JOHNLEWIS319 UPGRADES Ford to BUY, short term & LT. To
    DeutschBank ... SHOW YOUR ANALYSIS!!! F will hit $16 possibly
    by Q3 and $20 in 18 months. Its Momentum, Fundamentals, and
    Competitive Position is Strong, management is Strong, and its
    play in China is Strong. Europe is improving. TODAY, as the
    Congress votes to pass the 3-month debt ceiling extension, the
    market will react well, and F will continue its positive climb. WHAT
    is DeutchBank's rational motivation to suggest a HOLD...it's research dept should ask for FORGIVENESS!!! The Market wants
    to go UP, UP, UP, and Ford will go UP with it!!!
    23 Jan 2013, 07:49 AM Reply Like
  • Robert Hennecke
    , contributor
    Comments (534) | Send Message
     
    Very suspect 'analysis'. I suspect market manipulation to permit their 'people' to take positions knowing full well that there is a high probability of a beat on the 29th. Outlook is bullish as sales for 2013 re: SAAR is possibly 15,3 Million. Then there is the much greater profitability due to Ford one, stabilization of Europe and shuffling the deck with the closing of Genk and moving production to Spain. This will pay dividends in 2014, 2015. Ford will gain at the expense of Toyota and Honda in China if only for political reasons. US unemployment will likely fall to 7% and housing starts will take off in 2013, US gdp will easilly be 3%. This year, 2013 will be a growth year, maybe even more than 3% gdp. The only negative for Ford is the Yen collapse. That could give Toyota and Honda a major edge crimping margins for the big 3.
    26 Jan 2013, 11:09 AM Reply Like
  • CaptainDK
    , contributor
    Comments (6) | Send Message
     
    Totally agree with above. I wonder if they are trying to push stock down so they can buy like Goldman Sachs does.
    23 Jan 2013, 08:40 AM Reply Like
  • JoeCabo
    , contributor
    Comment (1) | Send Message
     
    totally agree with above 2 comments--F poised to go much higher--I have it at $15.50 w/in 30 days---$20 by y-end
    23 Jan 2013, 09:20 AM Reply Like
  • mbeauch
    , contributor
    Comments (42) | Send Message
     
    Ford has a p/e of 3, why?
    23 Jan 2013, 09:22 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    MBe - Ford's quoted P/E of 3 is false - a data mining error.

     

    It was based on reported gross earnings of $20B in 2011 or $4.94 per share, which included $14B in a one-time non-cash tax accounting.

     

    Ford's actual earnings in 2011 were about $6B or $1.51 per share, for a true P/E of 9 then.

     

    The P/E calculation should never include one-time accounting changes in the earnings in the denominator. Ford provided the correct after-tax earnings figure of $1.51 for 2011, but the data mining bots continue to pick the wrong number off the report. Idiots!

     

    Ford's earnings and analyst estimates are available here: http://yhoo.it/12RcfiY . Note the "year ago EPS" of 1.51, and also the adjusted P/E of about 10 for Ford at the bottom, along with a 10.6 for the industry.

     

    Meanwhile here is a Y-chart view showing the 4Q11 EPS 10x anomaly: http://bit.ly/UlWIDO . Note that if Ford had really earned an extra $14B in 4Q12 ands not from a tax accounting change, then share price should have quadrupled or something overnight.

     

    If you want to dig into Ford's numbers, check out the quarterly reports - the SEC filings are the most detailed: http://myfrd.co/yKiLVC . Slide 4 of this document http://myfrd.co/yHM8Re tells the story.
    23 Jan 2013, 02:53 PM Reply Like
  • R K
    , contributor
    Comments (53) | Send Message
     
    I am certain auto industry is product driven , F has far better cars in the market than G.M. F has been able to hold and indeed improved margins in a weak economy , economy is improving , F is a far better investment !!! Any job openings at any banks for my comments ?
    23 Jan 2013, 12:02 PM Reply Like
  • drofbill
    , contributor
    Comment (1) | Send Message
     
    Manipulation. period.Deutsch Bank is not God. My bank still has a buy on F
    23 Jan 2013, 12:02 PM Reply Like
  • deanotow
    , contributor
    Comments (4) | Send Message
     
    Ford should at least beat the market going forward. They can beat the Prius in the long run, so why price Toyota at a P/E of 15?
    23 Jan 2013, 12:03 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Beat the Prius?

     

    Prius sales in Dec 2012 were just over 20,000 - to Ford's C-Max sales of 4,310.

     

    In November, the Prius numbers were just over 16,500, to Ford's C-Max of 4,850

     

    Ford has its work cut out for it to reach Prius level sales...
    23 Jan 2013, 03:26 PM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Also - Toyota shows a current P/E of just under 14, based on 2013 EPS estimates of $6.77. That P/E is consistent with a major industrial manufacturing company that is leading in profitability in the markets, and is growing globally versus the competition, with no indications of slowing down, and with most of the recall issues behind them.

     

    Meanwhile Ford is playing catch-up to Toyota globally.

     

    Going forward, Toyota is looking at FY2014 EPS at $8.11, for a forward P/E of 11.6, which suggests room for pricing of (TM) in the $110 to $115 range over the next 12-18 months. It might even make sense for Toyota to consider a split, if the price persists in the $100+ range in the coming months.
    24 Jan 2013, 08:36 AM Reply Like
  • Robert Hennecke
    , contributor
    Comments (534) | Send Message
     
    Prius sales may be beating ford for now but as Deanatow stated the C-max does indeed beat the prius but he meant it on a technical basis. The Prius benefits currently from being the first to pole with a viable hybrid but the reality is the consumers will eventually wake up to the fact that the mobile egg that is the Prius is not the be all and end all. How many professors bought it just to be pretentious snobs ? The man in the street needs range and economics to make a rational decision. When taxi drivers buy into a vehicle, that is when you have a real winner and I see taxi drivers doing the numbers on the fusion and c-max and coming to the conclusion that yes, the Prius has had it's day. Yes, Deanotow is right but he is speaking of what will be the case in late 2013 and into 2014.
    26 Jan 2013, 11:30 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    Rob - apparently the 1.3 million Prius owners in the US (and all may well be pretentious snobs, if you please) absolutely disagree with you.

     

    Would love to see Ford's hybrids outsell Toyota's, just as long as they can make money and turn a healthy profit doing it. Prius is highly profitable for Toyota, and millions of owners worldwide seem pretty satisfied with it. It is by far the biggest selling automotive product in Japan, and the biggest selling Hybrid in the US since it came out.

     

    Ford's hybrids - well let's just say the profitability of those products are in doubt.

     

    Even if Ford's hybrids were technically superior today, Toyota would be no more than a model year or two away from catching up. Remember when the Fusion hybrid achieved 41 mpg city compared to the Camry Hybrid's 35? Toyota went back to the drawing board, mimicking Ford, and suddenly the Camry's jumped to 42 the next model year. Ford's now shows 47 mpg, so guess where Toyota is going? Actually they are there, with the Prius reaching up to 53 mpg now.

     

    Ford's hybrids, bless their technology, are no where near selling at Toyota levels, and there is just no way that Ford will be selling compact hybrids at Prius levels any time in the foreseeable future. Not in 2013, not in 2014. The capacity just ain't there, and neither is the demand. They are building them as fast as they can to meet the demand that is there, but they are still less than a quarter of Toyota's. And Toyota can rise and build more. Ford cannot, as they are capacity-limited. Ford would have to invest another billion or two to open another hybrid-building plant, just to have any hope of catching up to Prius. And there is no way that couple-billion investment will come back in earnings from those hybrids.
    27 Jan 2013, 09:48 AM Reply Like
  • Robert Hennecke
    , contributor
    Comments (534) | Send Message
     
    The simple solution to me is to transform the money losing UK and or German and Spanish plants to making hybrid only vehicles which are commanding a premium relative to gas/diesels on the market and literally bypassing the reliance on the Eurozone market for the short to medium term and importing gas/diesel vehicles into the Eurozone from NA. What I am saying is that they are wasting effort trying to build cars for the average Joe in Europe for Europeans as there isn't enough money in it. I know you will have a conniption fit over how that can be done and how the politicians will go along with it and the unions etc...etc..etc.... It's simple, it's like this>>>>do you want to have an auto industry in Europe in the future, yes, well here's what has to happen. The Eurozone can only be realistically used to make boutique vehicles such as the Smart car, hybrids, electrics and luxury vehicles. Mass market vehicles are hopeless to be made there. This would be a means of permitting Ford to be able to ramp up hybrid pdn without building plants or buying old ones in NA and scale back if demand falls. The Prius has had a decent run but Ford is giving them a very hard time and the C-max and it's other variant is a game changer. Look at the range. NA drivers need range and space. This isn't Asia nor Europe. Regarding China, Ford stands to gain at the expense of toyota for political reasons. It may not be pleasing to an economist (I'm not one) but you take your money where you can get it and this is more money for R&D. Ford is coming on strong. The one thing that is very worrying frankly is the Yen collapse, that is a serious monkey wrench quite frankly. Yes I do believe that there is an element of pretentious snobbery regarding driving a Prius in the early days. The benefits of standing out on the basis of product choice is fading fast and now it's a meat and potatoes cost/benefit analysis of the plumbers, handymans of the world. The Transit fits into that category. I don't know if there is a hybrid Transit out yet but that vehicle has legs. It can also be easilly modified to be a camper/cargo vehicle with clever engineering.
    27 Jan 2013, 11:57 AM Reply Like
  • Tdot
    , contributor
    Comments (3444) | Send Message
     
    If Ford can profitably build hybrids in Europe, and export them profitably elsewhere, then you can bet they will absolutely do so. The problem is the union and socialistic labor costs throughout Europe is utterly destroying the automakers there. Ford is losing billions building the carryover cars.

     

    Also, with politics such as they are, small diesels in Europe are far more cost-effective than hybrids, and they get about the same fuel efficiency.

     

    Ford's cost-efficient production sites are in the Americas and Asia. Europe is hopelessly mired in excessive cost structures, and Ford is not going to be able to unilaterally solve that problem. The most efficient and cost effective solution is building and selling in the same continent, with little importing and exporting going on. Which is why Toyota and Nissan and Honda are building in the US.

     

    If Ford wants to double or triple hybrid production for the US market, it is going to have to do it in North America. Ford can build hybrids for the Asians in Asia, and the Europeans in Europe. That is probably Ford's plan.
    27 Jan 2013, 02:24 PM Reply Like
  • Robert Hennecke
    , contributor
    Comments (534) | Send Message
     
    >>>>do you want to have an auto industry in Europe in the future, yes, well here's what has to happen. If you think through what I am saying, I am saying a model production reduction of say ten vehicles down to like two, take it or leave it. The Japanese are in the US to be able to scoop up gov't handouts and to bypass Japan bashing. The earthquake sped that up as they realize the home islands pdn capability can be wiped out in a day. You have to be cruel to be kind. I don't buy into multiple pdn lines. One line for one global pdt. = vast reduction in tooling, I'm speaking as a former toolmaker so I know that that's were the money goes. Assembly is incremental, tooling is fixed along with buildings. Small diesels are in fact more efficient but it's the margins. Making low cost diesels for the European market in Europe is plain stupid. IF they are to produce ANYTHING it should only be high end boutique vehicles and the commoditized vehicles made in NA, Asia, and latin America....that's it, that's all.
    27 Jan 2013, 07:16 PM Reply Like
  • dgpomeroy
    , contributor
    Comment (1) | Send Message
     
    DB doesn't give enough credit to Fords management team ... how quickly we forget!
    23 Jan 2013, 01:20 PM Reply Like
  • moran
    , contributor
    Comments (214) | Send Message
     
    DB does seem a bit suspicious.
    23 Jan 2013, 04:08 PM Reply Like
  • yard3man
    , contributor
    Comments (2) | Send Message
     
    Deutsche Bank and it's analys are a bunch of frauds. That's how they manipulate stocks to make their big money. Crooked!!!
    26 Jan 2013, 12:41 AM Reply Like
  • Robert Hennecke
    , contributor
    Comments (534) | Send Message
     
    I hear you loud and clear Mr. Yardman.
    26 Jan 2013, 10:59 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|