The automaker beat analyst estimates for the last three months of 2023.
With its popular models like the F-150, Mustang, and Explorer, Ford (F 0.08%) needs no introduction. This business has been around for over a century, and it's one of the world's largest car manufacturers today.
But this automotive stock hasn't been the biggest winner for investors. Shares have returned 26% in the past decade, a figure that includes dividends. For comparison's sake, the S&P 500 would've grown your capital by 240%.
As we focus our attention on the present situation and what the future might hold, is Ford stock a buy now?
Looking at the latest numbers
Ford blew past Wall Street estimates for the fourth quarter of 2023. Revenue increased by 2% to $46 billion. For the full year, sales jumped 11%. All of the company's segments -- including its legacy autos, electric vehicles (EVs), and the pro division -- reported growth in 2023 versus the year before. Management even announced a special one-time dividend of $0.18 per share.
While its adjusted earnings before interest and taxes (EBIT) margin dipped in 2023, Ford has identified where it can cut costsby $2 billion, with the expectation that the company's expenses in 2024 will be in line with last year.
Executives provided upbeat profitability guidance. They believe Ford will generate adjusted EBIT of $10 billion to $12 billion this year, the midpointof which would be higher than the $10.4 billion reported in each of the past couple years.
The financial update was well received by investors: Shares jumped 6% in after-hours trading.
Zooming out
Ford might be firing on all cylinders right now, at least according to its leadership team, but I think investors need to focus on some more important factors that matter over the long term. By doing so, it's easy to conclude that this won't be a winning stock over the next several years.
There are several reasons why I don't believe this is a good business.
From an industry perspective, there is a ridiculous amount of competition in the auto manufacturing space. Ford not only has to continue battling it out with other legacy car companies like GM, Stellantis, Toyota Motor, Honda Motor, and Volkswagen, among others, but there are also many EV makers vying for position as the industry shifts to a more sustainable future. This backdrop has and will continue to make it difficult for Ford to stand out from the crowd, attract customers, and grow sales.
And like its peers, Ford is unduly exposed to numerous factors that are outside of its control. Macroeconomic forces -- such as changes in interest rates and gas prices -- can have a profound impact on the auto industry by influencing consumers' propensity to buy new vehicles.
Supply chain issues, which have been at the forefront in recent years, can also negatively affect Ford's production capacity and input costs. Furthermore, there are ongoing labor disputes, which could become a problem again in a few years because the current United Auto Workers contract is set to expire in 2028. Again, the company has minimal control over any of this, which adds risk.
A closer look at the financials makes it incredibly clear that there is much to be desired. In the past decade, Ford's revenue growth has averaged a subpar 1.8% per year. U.S. GDP increased at a compound annual rate of 4.6% between 2012 and 2022. Investors shouldn't want to own a company that is expanding at a slower clip than the overall economy.
And going back to the nature of the industry, Ford can't escape how capital-intensive auto manufacturing is. There will always be the need to spend heavily on capital expenditures, with profit margins remaining in the single digits. But Ford has no choice but to play this game, unless it wants to lose to rivals.
The result is that these poor fundamental characteristics will likely lead to weak investment returns over the long term.
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Volkswagen Ag. The Motley Fool recommends General Motors and Stellantis and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
FAQs
Before you buy stock in Ford Motor Company, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Ford Motor Company wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Is Ford stock a good buy right now? ›
The highest analyst price target is $21.00 ,the lowest forecast is $10.00. The average price target represents 26.35% Increase from the current price of $12.07. Ford Motor's analyst rating consensus is a Moderate Buy.
What is the best stock to own with the Motley Fool? ›
The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, and Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2025 $45 calls on Intel and short May 2024 $47 calls on Intel.
Can Ford stock reach $100? ›
In conclusion, while Ford has the potential to reach $100 per share, it faces significant challenges that could hinder its stock price growth. Ford Motor Company's stock reaching $100 seems a daunting task, given it would require a 7.3x increase from its current price.
What is the 5 year forecast for Ford stock? ›
Long-Term Ford Motor Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 12.63 | 4.98% |
| 2026 | $ 13.26 | 10.20% |
| 2027 | $ 13.92 | 15.69% |
| 2028 | $ 14.61 | 21.45% |
2 more rowsAs a fully regulated bank, your savings are also protected by the Financial Services Compensation Scheme (FSCS), so we're not just a name you know – but one you can trust.
Is Ford stock overvalued or undervalued? ›
Over the past 52 weeks, F's P/CF has been as high as 11.02 and as low as 3.10, with a median of 4.61. These figures are just a handful of the metrics value investors tend to look at, but they help show that Ford Motor is likely being undervalued right now.
What stock will boom in 2024? ›
Top growth stocks in 2024
| Company | 3-Year Sales Growth CAGR | Industry |
|---|
| Nvidia (NASDAQ:NVDA) | 39% | Semiconductors |
| Netflix (NASDAQ:NFLX) | 7% | Streaming entertainment |
| Amazon (NASDAQ:AMZN) | 10% | E-commerce and cloud computing |
| Meta Platforms (NASDAQ:META) | 10% | Digital advertising |
6 more rowsThe Motley Fool has positions in and recommends Alphabet, Amazon, Chewy, Fiverr International, Nvidia, PayPal, Salesforce, and Uber Technologies. The Motley Fool recommends the following options: short June 2024 $67.50 calls on PayPal.
What is the Motley Fool top 10 stocks 2024? ›
The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Chewy, Fiverr International, Home Depot, Meta Platforms, Netflix, Nike, Nvidia, PayPal, Salesforce, Six Flags Entertainment, Target, Uber Technologies, Visa, Walt Disney, and Zoom Video Communications.
As you can clearly see from the Quality Grade breakdown above, General Motors Co has a better overall quality grade than Ford Motor Co. For investors who are looking for companies with higher quality than others in the same industry, General Motors Co could be a good stock to add to their portfolios.
Is Ford a smart investment? ›
Ford seems to be a “show me” stock, so market expectations are lukewarm. It was thus good to see an optimistic operating earnings outlook—a $500 million increase on the low and high end of free cash flow guidance—and the firm beating LSEG consensus for adjusted earnings per share of $0.42 by 7 cents.
Is Ford a safe investment? ›
Ford also reported diluted earnings per share of $1.08 for the full year, a huge improvement from the $0.49 loss in 2022. The results were good enough for the leadership team to approve a special one-time $0.18 dividend. The stock already yields a 4.95% payout, so this is music to the ears of income investors.
Who owns most of Ford stock? ›
The ownership structure of Ford Motor (F) stock is a mix of institutional, retail and individual investors. Approximately 45.19% of the company's stock is owned by Institutional Investors, 1.13% is owned by Insiders and 53.69% is owned by Public Companies and Individual Investors.
Is Ford a good long term buy? ›
Valuation metrics show that Ford Motor Company may be undervalued. Its Value Score of A indicates it would be a good pick for value investors. The financial health and growth prospects of F, demonstrate its potential to outperform the market. It currently has a Growth Score of C.
What is the Ford Outlook for 2024? ›
Full-Year 2024 Outlook
The company now expects to generate adjusted free cash flow of $6.5 billion to $7.5 billion – up from the initial outlook of $6 billion to $7 billion provided earlier this year.
Is Ford a penny stock? ›
This information is accurate as of April 2021. Many well-known brands once traded at penny stock levels, including Monster Beverage (NASDAQ: MNST), Ford (NYSE: F), SiriusXM (NASDAQ: SIRI), and pharma penny stocks such as Novavax.
Is Ford a good dividend stock? ›
Yes, F's past year earnings per share was $0.97, and their annual dividend per share is $0.78. F's dividend payout ratio is 41.27% ($0.78/$0.97) which is sustainable.
Is Ford going to split its stock? ›
After months of rumor, the Ford Motor Co. finally did it. In May, Ford's board announced, the company will ask its stockholders to approve a two-for-one stock split that will increase the number of outstanding Ford shares to 110 million.
What penny stocks to buy today? ›
Penny Stocks To Buy Today
| Company Name | LTP | % Change |
|---|
| DIL | 7.45 | 2.05 |
| Kanani Industries | 3.55 | 9.23 |
| Dynamic Cables Ltd | 577 | 2.85 |
| Hilton Metal Forging | 123.45 | 8.29 |
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