Has Ford’s Stock Peaked?

POZNAN, POLAND – 5 APRIL 2018: A Ford automobile logo is shown in Poznan. (Photo courtesy of SOPA… [+] Images/LightRocket through Getty Images/Omar Marques)
Getty Images/LightRocket
[As of 07/08/2020] Update on Ford’s Stock Since the end of 2020, Ford’s stock (NYSE: F) has grown 65 percent, from $8.79 to $14.50. In comparison, the broader S&P500 index increased by 16% during the same time period. Compared to Trefis’ $13 valuation, Ford’s stock is currently trading at a premium to its potential. Following Ford’s announcement of its Electrification Revolution at Capital Markets Day, the stock price of the company skyrocketed. Ford plans to increase its electrification expenditure to more than $30 billion by 2025, with electric vehicles accounting for 40% of the company’s global vehicle volume by 2030. Due to the continued worldwide semiconductor scarcity, the business announced more production cuts at eight factories in North America last week, which we predict to weigh on its market price in the near to medium term.

Trefis Revenue
After a steep drop in 2020 owing to the Covid-19 epidemic, we predict Ford’s revenues to recover to $140.7 billion in 2021. Furthermore, its net income is expected to increase to $3.1 billion, resulting in an increase in EPS to $0.76, which, when combined with the P/E multiple of 17.3x, will result in a valuation of $13, which is 7% cheaper than the current market price.
[As of 12/18/2020] Will Ford’s Stock Continue to Recover to Pre-Covid Levels?
Ford’s stock (NYSE: F) has attained its near-term potential after gaining more than 123 percent since the March bottom. Our conclusion is based on our interactive dashboard analysis, 2007-08 vs. 2020 Crisis Comparison: Ford’s Performance Against the S&P 500 Now and During the 2008 Downturn: Ford’s Performance Against the S&P 500 During the 2008 Downturn: Ford’s Performance Against the S&P 500 During the 2008 Downturn: Ford’s Performance Against the S&P 500 During the 2008 How Did Ford’s Stock Perform Against the S&P 500?
Ford, one of the world’s leading vehicle manufacturers, saw its revenues plummet by more than 21% in the first nine months of this year compared to the same period the previous year due to the Covid-19 crisis. Ford reported earnings of $0.60 per share in Q3 2020, beating expectations, and total revenues of $91 billion, up 1% year over year. In addition, over the first nine months, the corporation reported $19 billion in cash inflows from operating activities.
ADDITIONAL INFORMATION FOR YOU
Due to the Covid-19 epidemic, we predict Ford’s revenues to drop to $131 billion in 2020. Furthermore, its net income is expected to increase to $2 billion in 2020, bringing the EPS figure to $0.50. Following that, revenues are predicted to reach $133 billion in 2021, owing to a recovery across segments following the pandemic’s end. Furthermore, the EPS figure is expected to be approximately $0.47, which, when combined with a P/E ratio of just under 19.4x, will result in a valuation of around $9 for Ford.
[Updated on July 8, 2020] Ford’s Stock Is Set To Underperform Following a 67 percent recovery
Ford’s stock (NYSE: F) has risen 67 percent to $7 since late March (compared to around 46 percent for the S&P 500). After a significant increase in the number of Covid-19 cases outside of China alarmed investors and heightened fears of an impending global economic slump, the stock fell to a low of $4 in late March. The stock is now trading at around 12% below its high of $8 set in February 2020. Are the gains justified, or are investors getting too excited? We believe the stock price recovery is reasonable, but there isn’t much more space for growth.
What Happened to Ford During the Great Recession of 2008?
Ford’s stock has fallen from around $5.50 in October 2007 (the pre-crisis peak) to around $1.50 in March 2009 (when the markets bottomed out), meaning that the stock has lost up to 75% of its value from its pre-crisis peak. This was a more significant decrease than the S&P 500, which plunged by roughly 51%.
Ford’s stock, on the other hand, rebounded dramatically following the 2008 crisis, soaring to around $7 in early 2010 – a 400 percent increase between March 2009 and January 2010, compared to a 48 percent increase for the S&P 500.
Ford’s stock, on the other hand, lost 50% of its value between February 19th and March 23rd, 2020, and has since regained 67 percent. In comparison, the S&P 500 plummeted by roughly 34% before rebounding by about 46%.
Is The Recoveries Justified, and Can We Expect More Gains?
The recent rebound across industries may mostly be credited to Fed stimulus, which has essentially calmed investor concerns about companies’ near-term viability. While Covid instances continue to rise in many parts of the world, the planned opening of cities in the United States and Europe in stages gives investors some hope that the worst of the pandemic has passed.
The global spread of the coronavirus has resulted in lockdowns in a number of cities throughout the world, disrupting industrial and economic activities. This is likely to have a negative impact on consumer spending and consumption, resulting in fewer demand for automobiles and a reduction in Ford’s revenue. The volume damage was verified in the company’s Q2 statistics, which showed a 53 percent drop in overall sales volume. For the quarter, revenue dropped by 54% to $16.6 billion. The company’s net income increased to $1.1 billion as a result of a $3.5 billion gain on its investment in Argo AI.
The real recovery and its timing are dependent on the coronavirus’s propagation being contained. Trends In U.S. Covid-19 Cases is a dashboard that shows how the pandemic has expanded in the United States and compares it to trends in Brazil and Russia. With investors focusing on 2021 results, values become more crucial in determining value.
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