Ford Motor Co Stock Downgraded (F)

NEW YORK ( TheStreet) -- Ford Motor (NYSE: F) has been downgraded by TheStreet Ratings from buy to hold. Among the primary strengths of the company is its respectable return on equity which we feel is likely to continue. At the same time, however, we also find weaknesses including unimpressive growth in net income, generally poor debt management and weak operating cash flow.

Highlights from the ratings report include:
  • F, with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, FORD MOTOR CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • FORD MOTOR CO's earnings per share declined by 42.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, FORD MOTOR CO increased its bottom line by earning $5.01 versus $1.59 in the prior year. For the next year, the market is expecting a contraction of 70.0% in earnings ($1.50 versus $5.01).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 45.3% when compared to the same quarter one year ago, falling from $2,551.00 million to $1,396.00 million.
  • The debt-to-equity ratio is very high at 6.05 and currently higher than the industry average, implying that there is very poor management of debt levels within the company.

Ford Motor Company engages in the development, manufacture, distribution, and service of vehicles and related parts worldwide. The company operates through two sectors, Automotive and Financial Services. The automotive sector offers vehicles primarily under the Ford and Lincoln brand names. The company has a P/E ratio of 2.1, equal to the average automotive industry P/E ratio and below the S&P 500 P/E ratio of 17.7. Ford has a market cap of $37.49 billion and is part of the consumer goods sector and automotive industry. Shares are down 7% year to date as of the close of trading on Wednesday.

You can view the full Ford Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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