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TheStreet Open House

Ford CEO Mark Fields Zips Investors Past GM to a Near-Term Buy

NEW YORK (TheStreet) -- Ford (F) is a company in a positive transition to growth. Like its beleaguered rival General Motors (GM), Ford is perceived by Wall Street as a "glass half full." Ford stock closed Wednesday at $17.43, up 1.87% for the day and up nearly 13% year to date. GM, on the other hand, is down 7.1% year to date, and closed at $37.97.

Ford's unit sales for June fell 5.8%. But because analysts were anticipating a larger 6.6% drop, the news was perceived as good. Then there's the new CEO of Ford, Mark Fields, and his relatively modest starting compensation package -- which is loaded with incentives to bring his company success.

With some CEOs earning $30 million per year, Fields' annual salary of $1.75 million looks modest. In fact it's $250,000 less than his predecessor Alan Mulally. But again, Wall Street is upbeat.

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Details in a recent filing reveal the CEO of the second-largest U.S. auto maker will receive a grant of 710,227 stock options, which exercise at $17.21. There's also a performance bonus of up to 200% of his salary, adding another $3.5 million that Fields can earn for himself.

So clearly Ford's leader has generous incentives to make his company's customers and shareholders happy. This includes a back-ended cache of restricted stock grants, which when vested may be worth more than $5.25 million.

These performance inducements are dependent on Ford's stock moving higher. With a forward 1-year price-to-earnings ratio of 9, shares looks inexpensive compared to Tesla Motors' (TSLA) forward-P/E of nearly 71.

By the way, Ford has an electric car for sale that costs only $36,000. Powered by a lithium-ion battery, the 2014 Ford Focus Electric has an EPA-estimated rating of 110 city MPG. Demand will likely exceed supply.

Have you driven or seen the 2014 Ford lineup? In my opinion it's their best looking array of cars and trucks yet and will goose sales in the last two quarters of 2014.

The company is planning to unveil many new models this fall, including its all-aluminum F-150 truck with upgraded engine technology. Ford realizes many buyers are waiting to buy it, which creates an impetus to speed up production and accelerate deliveries.

Ford's strong financial results the past two years allowed it to increase quarterly dividends by 100% in 2013 and another 25% in the first quarter of 2014. At a share price of $17.40 the dividend yield is 2.9%.

With this momentum, is Ford still a buy? Let's look at the data.

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