Will Ford Motor Revive Its Legacy?

With shares of Ford Motor (NYSE:F) trading around $15, is F an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Ford Motor is a producer of cars and trucks. The company also engages in other businesses, including financing vehicles. Ford Motor operates in two sectors: Automotive and Financial Services. Through its sectors, Ford Motor provides a wide range of vehicles and vehicle parts and services to a multitude of consumers and companies worldwide. The company’s vehicles saw declining demand over the last several years as gasoline prices took a major toll on pockets. Ford Motor is now revolutionizing its vehicles in order to compete at the world stage. Look for Ford Motor to fuel a recovery in the American automobile industry and provide highly demanded vehicles, parts, and services.

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T = Technicals on the Stock Chart are Strong

Ford Motor stock has seen its fair share of volatility over the last several years. The stock has surged higher this year and is looking to attack previous resistance levels near $16-$17 per share. A solid break a move could see this stock really flying in the longer-term. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Ford Motor is trading above its rising key averages which signal neutral to bullish price action in the near-term.

F

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Ford Motor options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Ford Motor Options

30.39%

76%

73%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

June Options

Flat

Average

July Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Ford Motor’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Ford Motor look like and more importantly, how did the markets like these numbers?

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2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)

14.29%

-88.17%

0%

-55.93%

Revenue Growth (Y-O-Y)

10.37%

5.34%

-2.65%

-6.52%

Earnings Reaction

-0.22%

-4.64%

8.59%

-0.99%

Ford Motor has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets seem to expect a little more from Ford Motor’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Ford Motor stock done relative to its peers, General Motors (NYSE:GM), Toyota Motor (NYSE:TM), Tesla Motors (NASDAQ:TSLA), and sector?

Ford Motor

General Motors

Toyota Motor

Tesla Motors

Sector

Year-to-Date Return

22.78%

20.19%

29.19%

209.3%

22.52%

Ford Motor has been an average relative performer, year-to-date.

Conclusion

Ford Motor is revolutionizing its vehicles and hoping to make American vehicles a very competitive option for most consumers and companies around the world. The stock is on a strong run that has put it near a critical price level where a solid break higher may see it coasting towards prices not seen in years. Over the last four quarters, earnings and revenue figures have been mixed which has led to investors expecting a little more. Relative to its peers and sector, Ford Motor has been a year-to-date average performer. WAIT AND SEE if Ford Motor can break above these key price levels.

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