Ford Motor Company (F)
is a Zacks Rank #5 (Strong Sell) that designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles worldwide.
The stock is trading near 2022 lows after handful of earnings misses that has forced analysts to lower estimates. The stock is still well off its pre-COVID lows and investors should be nervous that the stock could break $10.
About the Company
For is headquartered in Dearborn, MI. The company was founded in 1903 and currently employs over 180,000 people. Ford operates through three segments: Automotive, Mobility, and Ford Credit.
Ford is valued at $46 billion and has a Forward PE of 6. The company holds a Zacks Style Scores of “A” in Value, but “C” in Growth. The stock has a nice dividend paying 5%, which should draw investors into the name.
Q3 Earnings
In late October, the company reported earnings of $0.30 v the $0.31 expected. Revenue came in light and the company cut their FY22 adjusted EBIT to $11.5B
In the company’s outlook, Ford sees 10% year over year growth in wholesale shipments and higher earnings in North America. In post-earnings comments, the CFO said they are expecting a mild to moderate recession in 2023.
Estimates
When looking at estimates, we see a slight downward trend across all timeframes.
Next quarter is the most concerning for Ford, with estimates falling to $0.24 from $0.49 just 60 days ago. This 50% drop is fairly large and investors might want to stay away from the stock until Ford gets through that quarter.
Looking to next year, estimates have fallen from $1.94 to $1.81, or 7%.
Technical Take
Ford made 2022 lows of $10.61 back in July. From there, the stock rallied to $16 and is now trading under the $12 level.
The $16 resistance was the 200-day MA, which has fallen below $14. Sellers will likely show up there on any rally. But before the bulls can even consider that, they must contend with the 50-day at $13 and the 21-day at $12.50.
If the sellers show up under $11, the stock will likely break the $10 level and head to the 2019 trading range between $8 and $9. At those prices, the dividend will likely offer support to the stock.
In Summary
Ford is a popular brand that had a good run during the pandemic. However, a weakening economy and inflationary trends are hurting earnings. The stock will likely face a couple more quarters of pressure so investors should shy away until the environment improves.
For those interested in the sector a better option might be Harley-Davidson (HOG). The stock is a Zacks Rank #2 (Buy) that is coming off a 23% earnings beat.
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