Ford has a lot to celebrate so far in 2013, including its top-line growth with wholesale volume and total company revenue up 16% and 12%, respectively, compared with a year ago. These are very impressive results. Its growth was supported by year-over-year market share gains in all regions.
In all fairness to Ford, I want to mention the fact that it didn't go after or receive a government bailout like its rival General Motors during the financial fiasco of 2007-2009. GM was able to emerge from bankruptcy only after receiving $49.5 billion from the federal government in 2009.Kudos goes to Ford's proactive and focused leadership for guiding the company through a treacherous economic period while avoiding bankruptcy and rebounding as a strong and thriving publicly traded company. Ford reported at the end of its third quarter total cash of $25.74 billion with a book value per share (most recent quarter) of $4.87 compared to GM's $19.99. Both Ford and GM are making progress to achieve profitability in Europe by 2015, yet Ford outperformed GM in Asia for the third quarter due to a special event that impacted GM's third-quarter results there. From a shareholder's perspective it still pays to own Ford stock, which offers a dividend yield of 2.31%. This is not only sustainable but with a payout ratio of only 20% of operating income, I would anticipate the dividend to be increased by the end of 2013. It's beyond the scope of this article to attempt to explain all the aspects of the company's financial reporting. As it's required to do, Ford thoroughly disclosed all of the risk factors that any publicly traded automotive company and its investors might face. The risk factors in Ford's third-quarter report to shareholders included the possibility of "adverse effects on results from a decrease in or cessation or clawback of government incentives related to investments." The explanation of what this means may be the topic of a future article. Other risk factors included "failure of financial institutions to fulfill commitments under committed credit and liquidity facilities" and the ominous possibility that the company could face the "inability of Ford Credit to access debt, securitization, or derivative markets around the world at competitive rates or in sufficient amounts, due to credit rating downgrades, market volatility, market disruption, regulatory requirements, or other factors," the company states. If owning shares of Ford or GM makes you nervous in today's fast-changing economic environment, it would be prudent, as I've stated in past articles, to set up a trailing stop loss alert system like the one offered by TradeStops.