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Is Ford Motor (F) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Ford Motor Company (F - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Ford Motor has a trailing twelve months PE ratio of 6.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.6. If we focus on the stock’s long-term PE trend, the current level puts Ford Motor’s current PE ratio below its midpoint (which is 9.5) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 10.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Ford Motor Company has a forward PE ratio (price relative to this year’s earnings) of just 6.8, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Ford Motor Company has a P/S ratio of about 0.3. This is substantially lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Ford Motor Company currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes F a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Ford Motor Company is just 0.6, a level that is somewhat lower than the industry average of 1.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 2.7, which is considerably better than the industry average of 7.6. Clearly, F is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Ford Motor Company might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives F a VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one estimate go higher in the past 30 days, compared to none lower, while the full year estimate has seen two upward and one downward revision in the same time period.
This has had a noticeable impact on the consensus estimate, as the current quarter consensus estimate has moved up 5.1% in the past month, while the full year estimate has risen about 1.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Despite having a bullish trend, F sports a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Ford Motor is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a good industry rank (top 38% out of more than 250 industries) further supports the growth potential of the stock. However, over the past year, the sector has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Ford Motor.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Is Ford Motor (F) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Ford Motor Company (F - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Ford Motor has a trailing twelve months PE ratio of 6.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.6. If we focus on the stock’s long-term PE trend, the current level puts Ford Motor’s current PE ratio below its midpoint (which is 9.5) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 10.6. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Ford Motor Company has a forward PE ratio (price relative to this year’s earnings) of just 6.8, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Ford Motor Company has a P/S ratio of about 0.3. This is substantially lower than the S&P 500 average, which comes in at 3.3 right now. Also, as we can see in the chart below, this is somewhat below the highs for this stock in particular over the past few years.
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Ford Motor Company currently has a Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes F a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Ford Motor Company is just 0.6, a level that is somewhat lower than the industry average of 1.1. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 2.7, which is considerably better than the industry average of 7.6. Clearly, F is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Ford Motor Company might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives F a VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen one estimate go higher in the past 30 days, compared to none lower, while the full year estimate has seen two upward and one downward revision in the same time period.
This has had a noticeable impact on the consensus estimate, as the current quarter consensus estimate has moved up 5.1% in the past month, while the full year estimate has risen about 1.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Ford Motor Company Price and Consensus
Ford Motor Company Price and Consensus | Ford Motor Company Quote
Despite having a bullish trend, F sports a Zacks Rank #3 (Hold). This indicates that analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Ford Motor is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a good industry rank (top 38% out of more than 250 industries) further supports the growth potential of the stock. However, over the past year, the sector has clearly underperformed the broader market, as you can see below:
Despite the poor past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a strong value contender in Ford Motor.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>