Just as Ford Motor Company (NYSE:F) established an uptrend in 2019, that ended when the company reported quarterly earnings that mixed consensus estimates. Even though it is embarking on a growth plan into electric cars, SUVs, and trucks, the company issued a light outlook. This sent the stock down by 6% last week.
Ford reported EBIT of $1.7 billion, compared to $1.8 billion last year. Europe and China are still a drag on results. Ford forecast FY EPS of $1.20 to $1.35, which implies a forward P/E as high as 8 times. The company saw discrete signs of stability in its business in China.
And although it is actively working on the design and launch of new products, the light outlook sent the stock lower. Value investors seeking dividend income of 6.3% should consider accumulating Ford shares at these levels.
Ford held $23 billion in cash and has a $37-billion liquidity. The company has four approaches to creating value. First is improving its mix and expanding the development of its electric vehicle. Second is having a fitness through its VW and Mahindra partnership.
Its third approach is a global redesign whose progress is measured by sustainable profit growth and cash flow. The fourth approach is developing smart, or small, vehicles.
Takeaway
Ford is once again offering all promises for the long-term with pain for investors in the near-term. Accumulate shares on weakness.
Disclosure: Author owns shares of Ford.
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