Ford Motor (F) began the new decade with optimism as it emerged to compete in the era of smart vehicles and clean energy. The automaker is investing heavily in new technologies to keep pace in autonomous vehicles, ride sharing and electric cars. But does all that effort make Ford stock a buy right now?
The unveiling of the Mustang Mach-E in November 2019 was a key milestone in the company’s pivot toward what it called “the digital future.” The Ford Mustang Mach-E, an all-electric crossover, made its commercial debut in the U.S. in late 2020. Ford is beginning production of the Mach-E, a competitor to the Tesla (TSLA) Model Y, in China as well. And Ford didn’t stop there — it now has an electric version of the F-150 coming this spring.
Ford’s investment in electrification helped push shares to a 140% gain in 2021. That led to Ford briefly surpassing General Motors (GM) in market cap for the first time in five years. But where does Ford stand now? If you’re thinking about buying shares, it’s key to analyze the fundamental and technical picture first.
Electric F-150 Launch
Ford is set to launch the highly-anticipated electric pickup truck next week. The F-150 Lightning model received 200,000 reservations when it was first announced last May. CEO Farley tweeted that the first electric F-150’s would begin to be delivered on April 26.
The truck’s initial $40,000 price tag has it set to vie with the Tesla Model 3 sedan which retails for $48,000. The Elon Musk-led car company will not begin producing its Cybertruck until at least 2023.
The F-150 Lightning launch is viewed as a pivotal moment in Ford’s turnaround. The automaker has invested billions in its transition to electric vehicle production.
Last month, Ford said that it would split the company’s EV business and gas-engine business in a major company reorganization. The Wall Street Journal reported that both operations will be kept in-house, “with separate names and their own leadership structures and profit-and-loss statements.” Ford stock jumped on the news.
Ford’s EV-focused business will now be called Ford Model E. The other division handling Ford’s internal-combustion engine business will be known as Ford Blue.
Ford March Sales
Ford’s monthly retail sales slid in March. Overall, Ford sold 159,328 total vehicles in the U.S. last month. That’s a 30% decline from the previous year, as chip and other supply shortages weigh on production. Truck sales fell 39% year-over-year to 74,420 units, while SUV sales slipped 16% in the same period. However, those numbers represent an improvement over February totals as increased production helped lift retail sales.
Ford’s monthly EV sales totals also improved last month. The company sold 13,772 electric vehicles, a 16% increase from the previous year. New vehicle orders continue to come in at a rapid pace. The company hit more than 88,000 vehicle orders last month, up from 66,000 the previous year.
Adds To Plans To Boost EV Spending
Ford stock edged higher in the week of March 14 as the automaker expanded plans to boost EV output through several partnerships. The Detroit automaker extended a deal with Volkswagen (VWAGY) that would double European EV production to 1.2 million cars by 2023. Ford also made initial agreements with SK Battery and Koc Holding to build an EV battery plant in Turkey.
These agreements reflect Ford’s growing investment in the electric vehicle market. In February, the automaker boosted its EV spend by $20 billion. That investment added to the $30 billion Ford already earmarked for electric vehicles through 2025. Those investments were followed by the separation of the company’s EV and gas units. The reported reorganization will be led by former Apple and Tesla exec Doug Field.
The increase in EV spending comes amid soaring sales of Ford electric models. The company had to close orders for its hybrid 2022 Maverick pickup truck due to overwhelming demand. Orders for the 2023 Maverick will resume in the summer.
Ford stock tumbled after a Feb. 3 miss on Q4 earnings and revenue targets. The automaker warned that chip shortages and supply challenges could continue into early 2022.
On Feb. 5, Ford confirmed it would cut or suspend production at eight North American factories due to chip-supply constraints.
Overall, Ford’s fourth-quarter earnings slid 24% to 26 cents per share while revenue rose 5% to $37.7 billion. Sales increased 17% in North America, but offsetting those gains was a 27% sales decline in China and all international markets. Ford management said supply-chain disruptions from the Covid-19 omicron variant continued to impact key suppliers and affect vehicle production.
Ford is set to report Q1 earnings on April 27. Analysts expect earnings at 38 cents per share with revenue at $31.09 billion.
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Ford Stock Fundamental Analysis
To determine whether Ford stock is a buy now, fundamental and technical analysis is key.
The IBD Stock Checkup tool shows Ford stock has an IBD Composite Rating of 39 out of a best-possible 99. It remains far below the top tier of 90-plus-rated leaders, in terms of the most important fundamental and technical stock-picking criteria.
Ford stock has a weak EPS Rating of 22 out of 99. The rating compares quarterly and annual earnings-per-share growth with all other stocks. In the midst of transition, Ford has a spotty earnings track record. The company has reported more than its share of quarterly earnings declines over the past decade. However, forward-looking estimates are pointing to growth.
IBD ranks the carmaker No. 7 among its automotive industry peers. The automaker group ranks No. 87 out of the 197 industry groups tracked by IBD. It’s ideal to focus on the top stocks found in the top 40 IBD groups.
Ford Stock Technical Analysis
After spiking to longtime highs in early January, shares fell 8% on Jan. 19 as the overall market entered correction territory. That loss reversed the stock to its 21-day exponential moving average — a potential sell signal for investors who bought add-on Ford stock positions earlier this month. Another sell signal? Ford stock closed below its 10-week average with an 18% loss the week of Jan. 21. An earnings miss on Feb. 3 sent shares tumbling to a three-month low.
Still, that follows a 140% gain in 2021.
Consider Ford’s Relative Strength
Ford’s relative strength line — which measures a stock’s price performance vs. the S&P 500 — has pulled back significantly after spiking higher to start 2022.
IBD’s research shows the importance of focusing on stocks outperforming the market.
Ford Stock: A Buy Now?
Ford stock raced higher in 2021 and into the new year, but retreated sharply during the recent market correction.
Bottom line: Ford stock is not a buy now.
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