Can Ford Take Out the Competition?

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With shares of Ford Motor Co. (NYSE:F) trading around $15, is the stock 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 is a producer of cars and trucks. The company also engages in other businesses, such as financing vehicles. Ford operates in two sectors: automotive and financial services. Through its sectors, Ford provides a wide range of vehicles, vehicle parts and services to a multitude of consumers and companies worldwide. The company’s products saw declining demand in the past several years as gasoline prices took a major toll on pockets. Ford Motor is now revolutionizing its vehicles in order to compete on the world stage. Look for Ford to fuel a recovery in the American automobile industry and provide highly demanded vehicles, parts, and services.

T = Technicals on the Stock Chart are Mixed

Ford stock has struggled to make any positive progress in the past few years. The stock is seeing a good pop this year and is now consolidating, so it may need time before it makes its next move. Analyzing the price trend and its strength can be done using key simple moving averages: 50-day (pink), 100-day (blue), and 200-day (yellow). As seen in the daily price chart below, Ford is trading slightly above its rising key averages, which signal neutral to bullish price action in the near-term.

F

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

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Ford Motor Options

31.62%

86%

85%

Investors or traders are buying a significant amount of call and put options contracts compared to the past 30 and 90 trading days.

Put IV Skew

Call IV Skew

July Options

Flat

Average

August Options

Flat

Average

As of Tuesday, 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 significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Mixed Quarter-Over-Quarter

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

2013 Q1

2012 Q4

2012 Q3

2012 Q2

Earnings Growth (Y-O-Y)

14.29%

-88.17%

0.00%

-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 has seen mixed earnings and revenue figures in the last four quarters. From these numbers, the markets have been slightly disappointed with Ford’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

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

Ford Motor

Toyota Motor

General Motors

Tesla Motors

Sector

Year-to-Date Return

15.98%

25.81%

10.37%

202.33%

17.88%

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

Conclusion

Ford is a well-established vehicle products and services producer, distributed in a multitude of countries across the globe. The stock is currently consolidating gains after a bullish run, so it may need some time before the company makes its next move. Over the last four quarters, earnings and revenue figures have been mixed, which has resulted in slightly disappointed investors. Relative to its peers and sector, Ford has been an average year-to-date performer. WAIT AND SEE what Ford does this coming quarter.

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