Ford (F) Pops on CEO Decision Finality

NEW YORK (TheStreet) -- Rumors be damned. Ford (F) CEO Alan Mulally confirmed to the Associated Press he is staying at the helm of the automaker despite talk he had been offered the top job at Microsoft (MSFT). For months, Mulally has been pegged as the successor to Microsoft's Steve Ballmer once he retires in the coming months.

By late morning, Ford had climbed 1.5% to $15.61, while Microsoft tumbled 1.3% to $35.95.

TheStreet Ratings team rates Ford Motor Co as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate FORD MOTOR CO (F) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had subpar growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has increased to $3,840 million or 12.05% when compared to the same quarter last year. Despite an increase in cash flow, FORD MOTOR CO's cash flow growth rate is still lower than the industry average growth rate of 30.57%.
  • FORD MOTOR CO's earnings per share declined by 24.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FORD MOTOR CO reported lower earnings of $1.42 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $1.42).
  • 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.

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