This is the question you must be asking if you have been a long holder of Ford Motor Company like I have been.
Let's not pull any punches: 2015 was a strong year for Ford, and it contained some of Ford's best sales in over a decade, and their best quarter ever in terms of pure profitability. Yet despite this continued improvement - continued execution on the One Ford plan - throughout 2015, Ford seemed to only decline.
And decline it did! In fact, if you look at the chart going all the way back to summer '14, you'll plainly see that from July '14 to January '15 the stock share price began a trend of declining by 11 cents a week. There was plenty of noise, including a major falloff in Aug/Sept, but it always regressed to the slope of 11c a week. In early '15 the stock got a very brief boost, but after March, back to 11c a week average declines every week, with robotic consistency. The bump the stock got after the August meltdown? Draw a line from when that gain stalled about October 9th before the pre-earnings runup, to the present, and you'll see the same thing: 11 cents a week decline. Like clockwork. The slope has not changed: for those of you who remember high school algebra, y=mx+b. B is the only variable that has changed, and not nearly enough to offset everything else.
If you're like me, you have to ask, why 11 cents a week? Why not 9c or 6c or 20c? Why is it so darn predictable? Even after the stock gets a boost, that 11c a week pattern returns. And the stock rarely breaks out much above or below the trendline. You'd think with all the random players in the market, that the trendline/slope would vary, BUT IT NEVER DOES. The slope did not change through the falloff after the beginning of the oil price war in late summer '14, the price reset in Feb '15, July '15 earnings (very short lived), and the price reset in Oct '15, from which we are still declining at 11c a week....
It is mind blowing that the market could be so pessimistic about Ford's prospects. We've all listened to the conference calls. Things are looking up in Europe, in China, in the US. Margins are good, the dividend is good and sustainable, costs are increasingly under control globally. Middle East/Africa is a nonentity, and they have managed to contain South America's bleeding.
We keep hearing excuses about peak auto and subprime, but let's get some things straight. 15 years ago, US auto sales peaked at the current level over 17M, with 1B fewer humans on planet earth, and 40M fewer people in the United States (today the US pop is around 330M).
The "peak auto" alarmists are, to be blunt, dead wrong about an imminent decline in sales. During the recession, between 2008 and 2013, the US alone lost 18 million new car sales, while average vehicle age crept up from 10.4 to 11.4 years. Prior to the recession, new car sales in the US averaged 16+M for most of the decade. Sales only returned to that level in 2014. Which is to say we are only in year 1 of replacing those 18 million lost sales. On subprime, let's go back to 2004 for a moment (a decent year several years before the crash): approximately 40% of car loans went to people with credit scores below 660. That number tightened up to approximately 28% of auto loans in the early years of the recession. Today it's around 35%. This is in the US of course, I don't know how this is measured globally.
To sum that up, the endless bloviating we hear about peak auto, and a supposed auto subprime crisis, imminent decline in new car sales and other assorted nonsense, does not present an accurate or useful picture of the market. Ford and other makers will continue moving very large numbers of cars and trucks for the foreseeable future, with any decline not occurring until new sales have absorbed many of the lost sales from '08-'13.
Disclosure: I am/we are long F.
Additional disclosure: Just a guy that likes spreadsheets and trades stocks.