Ford Banks on EV Development to Boost Share Value

Ford Banks on EV Development to Boost Share Value

Based on average ratings from nearly two dozen analysts offering price targets on a 12-month guidance for the last three months, the price target for Ford stock (NYSE : F) is $18.63. This target sits relative to a low estimate of $12 and a high estimate of $32. Depending on the analyst, the median estimate represents an increase of more than 39 percent from the previous price target of $12.21.

Ford Motor Company, of course, is the original American automotive company. Founded by Henry Ford on June 6, 1903, with 11 initial associate investors, it was quickly reincorporated in 1919 and is now the fifth largest automaker worldwide (based on sales) and among the most profitable. Perhaps its biggest claim to fame is being one of the only companies to survive the Great Depression. And, of course, Henry Ford may also be most well-known for his development of the assembly line that has become synonymous with modern factories across the globe.

A Strong Showing

For the current quarter, Ford stock has earned roughly $0.43 per share on $36.9 billion in sales. This is remarkably better than the previous quarter, when earnings ranged from $0.25 to $0.55 with a consensus estimate of approximately $0.37. While reported earnings only slightly beat the earnings—at $0.38—it was still far below analyst's initial expectations by nearly 41.6 percent. Over the past 12 months, though, quarterly growth is up 14 percent.

More important though, Ford Motor Company has made quite a decent run since 2020, when analysts had forecast earnings per share in the range of -$0.70 to $0.11. As a matter of fact, the consensus estimate estimated EPS to break even, at $0.00. Actual reported earnings, though, was an impressive $0.41, which exceeded all analyst expectation by more than 16,241 percent.



Electrification and the Digital Future

It seems that Ford's strategy heading into the new decade was to invest more heavily and steadily in new technologies. For the most part this is a means to keep pace with growing interest in electric vehicles, ride sharing, and autonomous vehicles.

This interest—and new commitment—led the automaker to unveil its new Mustang Mach-E, just before the New Year of 2020. Indeed, this November 2019 milestone would be key towards the company's new pivot towards what it called, at the time, “the digital future.” This updated model is an all-new electric crossover intended to compete with the Tesla Model Y. And just to round out the modernized offerings, Ford also delivered a brand new all-electric pickup truck: the Ford F-150 Lightning.

This overt investment in modern vehicle electrification helped to push share value up 140 percent in 2021. With plans to invest another $3.7 billion specifically to increase production for both EV and gas-engine vehicle it would seem that outlook is strong for the company.

A Quick Downturn

Then, last year, Ford Motor Company stock did not fare nearly as well. Analyst forecast that EPS in 2021 would be within the range of $1.68 and $2.05, holding a consensus estimate of $1.86. Unfortunately Ford shares did not do as well as the year prior, failing to meet EPS forecasts by more than 14 percent, at $1.59. Still Ford posted annual growth of more than 21 percent.

Overall, Ford Motor Company sales are down 4.5 percent on the year, so far, at a total of 154,461 vehicles sold (through May). This is should not be a terrible surprise as supply chain issues have caused a shortage in microchips and other production supplies necessary to streamline production.

This trend appears to be consistent in terms of performance outlook as well. The short term (2 to 6 weeks), the mid-term (6 weeks to 9 months), and the long term (more than 9 months) are all expected to remain bearish.

Analysts Give Ford Stock a Hold Rating

With this most recent guidance, investment analyst consensus advises that Ford has a rating of Hold. This is roughly how half of analysts feel, compared against about 38 percent who rate the stock as Buy and just a couple advising the stock should have a Sell rating.

In summary, the next average price target for Ford stock is, again, around $18. The current price, at time of publication is $12.25, which is not far off from the low estimate of $11.80. The median target sits at $17.00 while the high estimate is quite a bit higher: $32.00. Regardless of the accuracy of these shifting targets, it appears that analysts would agree Ford stock is overweight; and the majority of analysts would recommend a Hold rating.

 

 

Companies in This Article:

CompanyCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Ford Motor (F)$10.87-4.0%3.68%3.99Hold$18.32

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