Ford Motor Company (F) in Dearborn, Mich., designs, manufactures, markets, and services Ford trucks, automobiles, sport utility vehicles, electric vehicles (EVs), and Lincoln luxury vehicles globally. By investing more than $30 billion in EVs through 2025, F aims to become the No. 2 electric car producer in North America over the next two years.

While the stock has gained 53.8% in price over the past year, it retreated nearly 24.9% over the past month, closing yesterday's trading session at $18.35. Furthermore, the company faces severe competition in the burgeoning EV  market, with new entrants and major players striving for market share.

Also,  the current semiconductor chip shortage and vexing supply chain constraints could impact its production. So, we think F’s near-term prospects look uncertain.

Click here to checkout our Electric Vehicle Industry Report for 2022

Here is what could shape F's performance in the near term:

Boosting Production

Last month, F announced plans to significantly boost production of its F-150 Lightning pickup at the Rouge Electric Vehicle Center in Dearborn to 150,000 vehicles per year to meet  tremendous demand for the first all-electric version of America's best-selling vehicle, the F-Series. In addition, within the next 24 months, F  should have the capacity to produce 600,000 battery-electric vehicles per year worldwide.

Stable Growth Prospects

The Street expects F's revenues and EPS to rise 15.7% and 29.6%, respectively, year-over-year to $145.96 billion and $2.06 in its fiscal year 2022. In addition, F's EPS is expected to rise at a 74.2% CAGR over the next five years. The company also has an impressive earnings surprise history; it topped the Street’s EPS estimates in each  of the trailing four quarters.

Mixed Profitability

F's 13.2% net income margin is 100.7% higher than the 6.6% industry average. Also, its $15.79 billion cash from operations is 8493.8% higher than the $183.70 million industry average.

However, F's trailing-12-months gross profit margin of 12.1% is 66.2% lower than the 35.8% industry average. Also, its asset turnover ratio and ROC are 50.2% and 53.9% lower than its industry average of 1.04% and 7.5%, respectively. And its 11.9% trailing-12-months EBITDA margin is 4.5% lower than the 12.5% industry average.

POWR Ratings Reflect Uncertainty

F has an overall C rating, which equates to a Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. F has a D grade for Stability and a C for Quality. The stock’s 1.08 beta is in sync with the Stability grade. In addition, the company's mixed profitability is consistent with the Quality grade.

Among the 69 stocks in the F-rated Auto & Vehicle Manufacturers industry, F is ranked #28.

Beyond what I have stated above, one can view F ratings for Growth, Value, Momentum, and Sentiment here.

Bottom Line

With an impressive product pipeline, F is primed to become a long-term leader in the EV sector. However, the company's mixed profitability and rising competition in the EV space amid the ongoing semiconductor shortage could make it challenging for its shares to deliver handsome returns. Therefore, we think investors should wait for a more opportune time to invest in the stock.

How Does Ford Motor Company (F) Stack Up Against its Peers?

While F has an overall C rating, one might want to consider its industry peers, Isuzu Motors Limited (ISUZY) and Mazda Motor Company (MZDAY), which have an overall A (Strong Buy) rating.

Click here to checkout our Electric Vehicle Industry Report for 2022

F shares fell $18.35 (-100.00%) in premarket trading Thursday. Year-to-date, F has declined -11.78%, versus a -3.72% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

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