Thursday, February 4, 2016

Watch List: Ford

Good morning readers,

Today I would like to dive into the Ford Motor Company (F) to see if they are worthy of being added to the watch list. Now that I've grabbed hold of EMR, I can turn my sights to the auto industry and try to pick up a stock from that area. In the coming days/week, I'll be reviewing a small handful of them and seeing which one or two will be a possible investment option.

Let's dig in:

Ford Motor Company - (F):

Ford Motor Company is an auto manufacturer that sells their products around the world and helps to finance those who wish to buy their products. This splits their company into two sectors: auto and finance services (Ford Motor Credit Company). At this present time, they sell vehicles under the Ford and Lincoln brands out of 62 plants that are scattered across the globe.

Historical data:

Historically, Ford has had some issues but has ultimately overcome them. The most notable was the bailouts that took place only a few short years ago across multiple automobile manufacturers. Ford chose not to take the bailout and instead relied on the Cash for Clunkers program and other financing to move them out of the near closure that they experienced. Since then, the company has moved forward with redesigns of their vehicles and continues to move forward to prove their lines are worthy of American and foreign investment. In the last five years, Ford has had an average decrease in EPS of -1.55, a revenue increase of 4.36%, and has still yet to establish themselves again as steady dividend player. Although they are not currently a long running dividend player, they were at one point a steady stream of dividends for investors until 2008 when their cash crisis hit their company and other auto manufacturers. Thankfully, Ford has since resumed paying dividends since 2012 and has now had a steady increase of dividend payouts for the last three years.

Ford as it stands now:

Ford currently holds a decent P/E of 9.60, an EPS of 1.19, and a price of $11.38/share. With their ex-dividend date right in the rear view mirror (1/27/2016), the stock holds at a payout of 5.24% which equates to 60 cents annually paid out with a payout ratio of 34.7% and still continues to raise their dividend until further notice. This continues their three year progress of raising dividends. The stock price sits at the low of their 52 week range of $10.44-16.74 and their financial statements appear to support steady income from operations. Ford relies heavily on the sale of their best selling F Series trucks and with the price of gas at an all time low in the last few months, this greatly assists their continued sale of such vehicles.

To watch or not to watch:

Now that our basic evaluation of Ford Motor Company is complete, I would have to say that I really like the company as a whole. It says a lot about a company when they refuse to take a bailout while others take the cash and run. Not only that but they were able to dig themselves out of the hole and thrive without the bailout instead of simply surviving or turning over. Their dividend payout is a strong 5.24% which can fuel the portfolio for growth on the top end but with only three years of growth and years of simply not paying any dividends whatsoever, it would be a gamble to invest money with Ford. Regardless, the company shows great promise and I feel that it has earned a spot on the watch list as a potential buy as it currently sits at a discount price and would seemingly be worth the gamble.

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