Shares of Ford (F, Financial) fell sharply by 8.31% as the company faced investor disappointment following the release of its third-quarter earnings. Despite surpassing analysts' revenue expectations, the stock declined due to lower-than-expected sales volumes and ongoing challenges in the electric vehicle market.
Ford has forecasted its fiscal year 2024 operating income to be around $10 billion, which is at the lower end of its previous guidance. This adjustment is attributed to higher-than-anticipated warranty costs and ongoing inflationary pressures. Additionally, the company reported a loss of approximately $1.2 billion from its Model E line, highlighting challenges in pricing and heightened competition within the electric vehicle sector.
In terms of valuation, Ford's current stock price stands at $10.43. The GF Value for Ford is estimated at $14.42, suggesting that the stock is [modestly undervalued](https://www.gurufocus.com/term/gf-value/F). Ford's Price-to-Earnings (P/E) ratio is 10.86, while its Price-to-Book (P/B) ratio is 0.95, indicating a potentially attractive value proposition for value investors.
However, investors should be aware of several warning signs. Ford's Altman Z-score is 1.06, which places it in the distress zone, implying a possible risk of bankruptcy within the next two years. Additionally, the company has issued $7.4 billion of new debt over the past three years, increasing its financial leverage.
On a positive note, Ford's Beneish M-Score is -2.34, implying that the company is unlikely to be a financial manipulator. The company's gross margin sits at 8.04%, with a Return on Equity (ROE) of 8.83% and a Free Cash Flow yield of 12.73%, highlighting its cash-generating capabilities.
Investors should closely monitor Ford's strategic maneuvers, particularly in the electric vehicle market, to assess the company's potential for recovery and growth. The upcoming fiscal year will be crucial for Ford as it navigates these challenging times.
