Is Ford Motor Enticing After Recent Headlines?

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 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 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.

The idea of a solar-powered vehicle has been around for a considerable amount of time, though in reality, the application of solar power to a vehicle hasn’t quite panned out in the way that it needs to in order to become a viable means of transportation. This hasn’t stopped companies from working toward that goal, however, as Ford believes it may have a solution for helping solar power become a more feasible source of automotive power. Based on its C-Max Energi crossover-hatchback people carrier, Ford has outfitted the roof with solar panels, a move that has already been done and is available on some cars as an option.

However, what makes Ford’s concept system special is a concentrator that essentially performs like a magnifying glass under the sun. This unit would take the broad sun rays and concentrate them onto the vehicle’s roof with increased intensity. Through this method, the power produced would theoretically be enough to recharge the car’s battery pack — whereas now, installed solar panels can do little more than power the HVAC system of the car, or the stereo.

T = Technicals on the Stock Chart Are Mixed

Ford Motor stock has been coasting higher over the past several months. The stock is currently surging higher and looks poised to continue. 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 below its rising key averages, which signals neutral to bearish 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

28.65%

56%

53%

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

Put IV Skew

Call IV Skew

February Options

Steep

Average

March Options

Steep

Average

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

2013 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)

-69%

15.38%

14.29%

-88.17%

Revenue Growth (Y-O-Y)

11.84%

14.71%

10.37%

5.34%

Earnings Reaction

1.37%

2.53%

-0.22%

-4.64%

Ford Motor has seen mixed earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Ford Motor’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

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

Ford Motor

General Motors

Toyota Motor

Tesla Motors

Sector

Year-to-Date Return

0.29%

-0.32%

-1.01%

-1.99%

-1.75%

Ford Motor has been a relative performance leader, year to date.

Conclusion

Ford is a well-established vehicle products and services producer distributed in a multitude of countries across the globe. The company believes it may have a solution for helping solar power become a more feasible source of automotive power. The stock has been rising higher in recent years. Over the past four quarters, earnings have been mixed while revenues are increasing, which has left investors with mixed feelings. Relative to its peers and sector, Ford has been a relative year-to-date performance leader. Look for Ford Motor to OUTPERFORM.

Using a solid investing framework such as this can help improve your stock-picking skills. Don’t waste another minute — click here and get our CHEAT SHEET stock picks now.