Ford Stock Offers Exceptional Value: Here’s the Inside Scoop
Ford Motor is set to announce earnings post-market on Wednesday. With a P/E ratio of just 5.83 and a dividend yield of 5.43%, this stock presents an irresistible opportunity.
Renowned automaker Ford Motor Company (F) kicked off 2018 with a profit warning on January 16, which was further underscored by a tepid market response to its Q4 results released on January 24. The company is gearing up to reveal its Q1 earnings after the market closes on April 25. Ford’s shares peaked at $13.29 on January 16 but then saw a sharp 24% drop, hitting a 2018 low of $10.14 on March 2. As of Monday, April 23, shares closed at $11.04, marking a 10.6% decline year-to-date and sitting deep in correction territory, 16.9% below the January high. However, since the March low, the stock has rebounded by 8.9%.
Analysts anticipate Ford will report earnings per share (EPS) of 41 cents for the first quarter, with expectations for year-over-year growth in both earnings and revenue. Investors will be closely watching commentary on rising aluminum and steel costs, foreign exchange challenges, increasing auto loan rates impacting Ford Credit’s margins, and investments in autonomous vehicle technology.
41 cents
The projected earnings per share for Ford in the upcoming report.
As a longtime Ford vehicle owner, I’ve grown fond of the Lincoln brand, largely due to its superior service experience compared to typical Ford dealerships. Recently, Ford has faced challenges with leftover 2017 models, including some Lincoln vehicles, while 2018 Lincoln models experienced delivery delays into January.
I personally upgraded from a 2004 Lincoln Town Car to a 2018 Lincoln Continental, which took until late January for delivery. Impressively, the dealership delivered the car to my home and spent over an hour demonstrating all its features. For servicing, they provide a loaner vehicle at my home and handle the Continental’s transport to the dealership. So far, my experience has been outstanding. Interestingly, my salesperson mentioned they had 15 Lincoln Navigators priced at $75,000 in stock, alongside a backlog for the $90,000 model.
Ford Motor’s daily stock chart
Image courtesy of MetaStock Xenith
The daily chart reveals Ford’s price gap down at the start of 2018, falling below the semiannual pivot point of $11.71 following the negative earnings reaction on January 25. This pivot is marked as the second horizontal line from the top. Since then, the stock has remained under its 200-day simple moving average (SMA) of $11.50. After hitting the 2018 low of $10.14, Ford’s shares have hovered below this SMA and currently trade near this week’s pivot at $11.08.
Ford Motor’s weekly stock chart
Image courtesy of MetaStock Xenith
The weekly chart indicates a potential positive close this Friday above the five-week modified moving average (MMA) of $11.02. Such a close would set the stage for targeting the 200-week SMA, also known as the "reversion to the mean," at $13.20. Additionally, the 12x3x3 weekly slow stochastic is expected to climb to 42.99 this week, up from 35.10 on April 20.
Investment approach: Consider purchasing Ford shares on dips toward the quarterly value level of $10.05, and look to trim positions when the stock rallies to the semiannual and monthly risk thresholds of $11.71 and $11.87, respectively.
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