Ford Motor CoF

Morningstar Rating

Stock Research and Analysis

by David Whiston, CFA, CPA, CFE

Ford Motor Company's products, marketing, and union contract should position the automaker to compete better than in the past. Still, it will take time for the company to regain market share in the United States, as some consumers are still very loyal Read more

Bulls Say

Ford recently doubled its dividend and received an investment-grade credit rating from major rating agencies.

The revamped Fiesta, Focus, Fusion, and Taurus show Ford can make quality, fuel-efficient vehicles to compete with Toyota and Honda.

We expect Ford's free cash flow generation to significantly improve over the coming years.

Ford is ahead of GM in its use of common vehicle platforms. Read more

Bears Say

The auto industry is very cyclical, and until recently, Detroit automakers had been losing significant U.S. market share to foreign automakers for years.

Long-term profitability could be hindered by unions, which traditionally have wanted their share of the pie. The nonunionized import automakers in the U.S. do not have this problem.

Stricter fuel economy regulations will make cars more expensive to build, and these costs are likely to be passed on to consumers.

Ford's stock can sell off heavily because of macroeconomic fears, even if the company itself is doing well.

Although Ford's products are much improved, there are plenty of Americans who refuse to buy from a Detroit automaker because of prior quality problems. Read more

Management

Ford's capital allocation has dramatically improved the past few years. Return on invested capital has easily exceeded cost of capital the past two years, and we are pleased to see Ford use its cash to substantially reduce debt. We also agree with management's Read more

Profile

Ford Motor Company manufactures automobiles under its Ford and Lincoln brands. The company has about 16% market share in the United States and nearly 8% share in Europe. Read more