Shares of Ford (F, Financial) dropped 3.77% after Morgan Stanley analyst Adam Jonas downgraded the stock. Jonas revised his rating from Overweight (Buy) to Equal-Weight (Hold) and adjusted the price target from $16 to $12.
Ford Motor Co (F, Financial), currently trading at $10.4598, has faced a tumultuous period with a significant stock price decline. The company's performance metrics present a mixed bag. Ford's market capitalization stands at $41.58 billion, with a price-to-earnings ratio (PE) of 10.9.
Despite the downgrades, Ford's dividend yield of 5.7%, which is near its 3-year high, offers some solace to investors. Additionally, Ford's price-to-sales (PS) ratio of 0.24, close to its 3-year low, suggests the stock could be undervalued. According to GuruFocus, Ford's GF Value stands at $14.6, indicating it is modestly undervalued.
However, significant warning signs cannot be ignored. Ford's Altman Z-score of 1.06 places it in the distress zone, implying a possibility of bankruptcy in the next two years. Long-term debt continues to be a concern, with the company issuing $7.4 billion of new debt over the past three years. Furthermore, the return on invested capital (ROIC) is less than the weighted average cost of capital (WACC), indicating capital inefficiency.
On the brighter side, Ford's Beneish M-Score of -2.34 indicates it is unlikely to be a manipulator. The stock's forward price-to-earnings ratio (Forward PE) of 5.4 is relatively low compared to its industry peers, which might attract value investors.
Ford's financial strength and profitability remain moderate, with a financial strength grade of 'C' and profitability grade of 'C' respectively. The company’s predictability rank is low, which may deter risk-averse investors.
In summary, while Ford (F, Financial) offers an attractive dividend yield and appears modestly undervalued according to the GF Value framework, it faces considerable financial risks and operational challenges that potential investors should carefully consider.
