Ford: The Last Brutal Quarter

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Shares of Ford Motor (F Quote) have started to gain a lot of Street cred. After bottoming at $1.70 on March 6, the stock went on to rise in 10 of the next 11 sessions, hitting $2.90 on March 23. After moving sideways into early April, the stock again rose in seven out of eight sessions, and recently traded hands at $4.30. Ford still has its detractors: A Credit Suisse analysis suggests the stock is worth no more than $3.

(Goldman Sachs upgraded Ford to a buy on Wednesday with a $6 price target, but this column looks more closely at the bear case issued by Credit Suisse.)

At this point, investors must wrestle with a pair of key questions. First, should the stock get credit for possible market-share gains and cash-flow growth resulting from the deep distress at its domestic rivals? And second, is the company (and its equity) really out of the woods in the midst of this deep economic crisis?

Friday's quarterly conference call will enable investors to get a better read on key balance-sheet and expense metrics. And it will allow investors to stress-test the assumptions that yielded the above-noted $3 price target.

When looking at the automakers, the key assumptions revolve around industry sales volumes and relative market-share strength. The industry typically sold 16 million to 17 million units a year in good times but will likely sell fewer than 10 million units in 2009. Goldman Sachs, in its Wednesday upgrade of Ford, predicts that industry sales will hit 11 million this year, on expectations that a "cash for clunkers" program will be enacted.