Ford Motor (F) began the new decade with optimism as it emerged to compete in the era of smart vehicles and clean energy. The automaker is investing heavily in new technologies to keep pace in autonomous vehicles, ride sharing and electric cars. But does all that effort make Ford stock a buy right now?
The unveiling of the Mustang Mach-E in November 2019 was a key milestone in the company’s pivot toward what it called “the digital future.” The Ford Mustang Mach-E, an all-electric crossover, made its commercial debut in the U.S. in late 2020. Ford is beginning production of the Mach-E, a competitor to the Tesla (TSLA) Model Y, in China as well. And Ford didn’t stop at electrification with a crossover — it now has an electric version of the F-150 coming this spring.
Ford’s investment in electrification helped push shares to a 140% gain in 2021. That led to Ford briefly surpassing General Motors (GM) in market cap for the first time in five years. But where does Ford stand now? If you’re thinking about buying shares, it’s key to analyze the fundamental and technical picture first.
Ford stock tumbled after a miss on Q4 earnings and revenue targets. The automaker warned in its Feb. 3 report that chip shortages and supply challenges could continue into early 2022.
On Feb. 5, Ford confirmed that would cut or suspend production eight North American factories due chip-supply constraints.
Overall, Ford earnings slid 24% to 26 cents per share while revenue rose 5% to $37.7 billion. Sales increased 17% in North America, but those gains were offset by a 27% sales decline in China and all international markets. Ford management said supply chain disruptions from the Covid-19 omicron variant continued to disrupt key suppliers and affect vehicle production.
Ford said it expects adjusted EBIT of $11.5 billion-$12.5 billion for 2022. That would be an increase of 15%-25% over 2021.
Plans To Boost EV Spending
Ford is planning to increase its investment in electric vehicles by $20 billion, according to Bloomberg News. The investment would add to the $30 billion Ford already plans to put into electric vehicles through 2025. The reported reorganization will be led by former Apple and Tesla exec Doug Field.
The increase in EV spending comes amid soaring sales of Ford electric models. The company had to close orders for its hybrid 2022 Maverick pickup truck due to overwhelming demand. Ford will resume orders for the 2023 Maverick in the summer.
And on Jan. 4 the automaker announced it would beef up production of the all-electric F-150 Lightning. Ford plans to double its annual output of the popular model to 150,000 vehicles per year by 2023. The company cited “unprecedented consumer interest” for the ramp up.
Ford January Sales
Ford sales were relatively flat the month of January. But one bright spot? EV sales had the best start ever for sales of electric vehicles.
Overall, Ford sold 143,578 total vehicles in the U.S. last month. That number about matches totals from January 2021. Truck sales fell about 4.3% to 71,734 vehicles. But SUV sales saw an 8.5% gain year-over-year to a tally of 66,122.
Ford’s EV sales nearly tripled in January. That segment hit sales of 13,169 units, which marks a 167.2% increase from a year ago. That total also outpaced the overall electrified segment. “Ford market share increased over a year ago on strong demand for our newest products such as Bronco, Maverick and Mach-E,” VP Andrew Frick said in a Feb. 2 statement.
Market Cap Tops $100 Billion, Briefly
Ford’s market value hit a milestone on Jan. 13 as it surpassed the $100 billion mark for the first time ever. Shares hit a 20-year high.
Ford’s valuation has fallen to $72 billion. That’s back below GM ($74.5 billion) but above Rivian ($55 billion) in terms of market value cap. Tesla still leads the automotive pack with a valuation of more than $900 billion.
Ford Stock Fundamental Analysis
To determine whether Ford stock is a buy now, fundamental and technical analysis is key.
The IBD Stock Checkup tool shows Ford stock has an IBD Composite Rating of 61 out of a best-possible 99. The rating means Ford stock ranks high vs. all stocks, but just below the top tier of 90-plus-rated leaders, in terms of the most important fundamental and technical stock-picking criteria.
Ford stock has a weak EPS Rating of 21 out of 99. The rating compares quarterly and annual earnings-per-share growth with all other stocks. In the midst of transition, Ford has a spotty earnings track record. The company has reported more than its share of quarterly earnings declines over the past decade. However, forward-looking estimates are pointing to growth.
IBD ranks the carmaker No. 7 among its automotive industry peers. IBD’s automaker group ranks No. 51 out of the 197 industry groups tracked by IBD. In general, it’s ideal to focus on top stocks found in the top 40 strongest IBD groups. The automaker group has improved from a near-worst ranking just months ago to join the top 30.
Ford Stock Technical Analysis
After spiking to long-time highs in early January, shares fell 8% on Jan. 19 as the overall market entered correction territory. That loss reversed the stock to its 21-day exponential moving average — a potential sell signal for investors who bought add-on Ford stock positions earlier this month. Another sell signal? Ford stock closed below its 10-week average with an 18% loss the week of Jan. 21. An earnings miss on Feb. 3 sent shares tumbling to a three-month low.
Still, that follows a 140% gain in 2021.
Consider Ford’s Relative Strength
Ford’s relative strength line — which measures a stock’s price performance vs. the S&P 500 — has pulled back significantly after spiking higher to start 2022.
IBD’s research shows the importance of focusing on stocks outperforming the market.
Ford Stock: A Buy Now?
Ford stock raced higher in 2021 and into the new year, but retreated sharply in the market correction.
Bottom line: Ford stock is not a buy now.
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