Why Ford (F) Stock Is Up Today

NEW YORK (TheStreet) -- Ford  (F) rose Wednesday after Ford Automotive Finance, the Chinese subsidiary of Ford Motor Credit Company, completed the first asset-backed securitization, or ABS, in China to help finance the U.S. automaker's vehicle sales in the country.

Ford Automotive Finance is the first wholly foreign-owned auto finance company to complete this type of transaction in China.

Ford also announced Wednesday it would license its patented inflatable safety belt technology to other companies and industries, including rival automakers. Ford said the system "enhances protection" for passengers, specifically children and the elderly.

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The company said in a press release that broader adoption of the technology could lead to safer travel and could lessen injuries in other forms of transportation including military vehicles, aircraft, and boats.

The stock was up 1.04% to $16.48 at 11:04 a.m.

Separately, TheStreet Ratings team rates FORD MOTOR CO as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FORD MOTOR CO (F) a BUY. This is driven by some important positives, 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, good cash flow from operations, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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

  • F's revenue growth trails the industry average of 22.2%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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.
  • Net operating cash flow has significantly increased by 952.13% to $2,220.00 million when compared to the same quarter last year. In addition, FORD MOTOR CO has also vastly surpassed the industry average cash flow growth rate of 42.14%.
  • 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.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Automobiles industry and the overall market, FORD MOTOR CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • FORD MOTOR CO's earnings per share declined by 40.0% 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 $1.75 versus $1.42 in the prior year. For the next year, the market is expecting a contraction of 24.0% in earnings ($1.33 versus $1.75).
  • You can view the full analysis from the report here: F Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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