Factors to Consider:
Barchart technical indicators:
96% Barchart technical sell signal
Trend Spotter sell signal
Below its 20-, 50- and 100-day moving averages
Lost 9.49% in the last month
Lost 24% in the last quarter
30.57% off its one-year high
Relative Strength Index 32.62
Recently traded at 9.02, which is below its 50-day moving average of 9.95
Wall Street is high on the stock; 13 brokerage firms have assigned 20 analysts to churn out reports
Analysts project revenue will be down 0.2% this year but up 6.5% next year
Earnings are estimated to be down 12.6% this year but turn around and increase by 18.9% next year and continue to increase annually by a rate of 10.45% for the next five years
Even though these numbers do not impress me, Wall Street has given five strong buy, eight buy, seven hold and no sell or under perform recommendations to their clients
They project that investors at this level will see an annual total rate of return in the 24% to 28% range over the next five years
P/E is 5.33, which is a big discount to the market P/E of 14.6
The dividend rate is 2.21% but is only 10% of projected earnings and just slightly below the market dividend rate of 2.4%
The balance sheet is rated B
The good news is North American revenue and earnings are increasing
The bad news is foreign sales account for 41% of revenue and are also subject to currency fluctuations
Revenue is weakening in European markets as the recession continues
South American and Asian sales look promising
Competition for new auto sales is stiff but the whole industry is having problems.
Over the past year while Ford was down 31%, Toyota (TM)
was down 14%, Honda (HMC)
down 25% and General Motors (GM)
off a whopping 36%:
The competitions' projection by analysts:
Revenue projected to increase by 11.8% this year and 10.2% next year
Earnings to increase by 202.6% this year and 12.9% next year
Revenue projected to increase by 13.5% this year and 20.1% next year
Earnings to increase by 162.2% this year and 12% next year
Revenue projected to increase by 2.7% this year and 6.8% next year
Earnings estimated to be down 17.5% this year but increase by 29.4% next year
Ford is definitely in need of a tune-up. The investors are presently bailing and the short interest sharks are moving in.
There are bleak numbers projections being made by analysts but they also see the P/E of 5.33, which is a big discount to the market, as too good to pass up.
Those of you holding this stock or buying today may have to hold it for a long time to see a profit. My advice is to watch the 14-day turtle channel and the moving averages to signal a bottom.
You will have to be nimble to buy in fast because the short interests will panic and run for cover. Be careful on this issue.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Stock quotes in this article:
F, HMC, TM, GM