An analyst’s upgrade of Ford (NYSE:F) stock has little meaning. Investors must come up with their own conclusions. A strong earnings report, followed by updated sales figures, are the two things investors should look at.
Ford reported third-quarter revenue of $37.67 billion on profit of $0.29 a share. The dividend rate stays the same, which sets the yield at well-above 6%. At its lowest point, Ford’s stock yielded nearly 7%.
Regardless, the stock’s rally could be limited due to the latest sales figures.
Edmonds reported that Ford October sales fell 2%. Most notable was the drop in F-150 sales by 7.3% and truck sales, down ~5%. SUV sales rose 6.7% on the month. Still, when unit prices are rising, this will offset a drop in sales volume.
As such, F stock could get to the analyst $12 PT set by Goldman Sachs. A product refresh, a manageable balance sheet, cost control, and a renewed approach in cutting layers in management will lead to business strength in 2019.
Near-term headwinds
Ford still needs to strengthen sales of its iconic F-150 and truck division. Prices are higher in this space and could expand profit margin. But Ford cannot have weak numbers repeating like October.
General Motors (NYSE:GM), which also reported strong quarterly results, will continue to pressure Ford. Management must act quickly and be responsive to changing market conditions.
Disclosure: Author owns shares of Ford.
