Shares of Ford (F, Financial) rose 5.16% today, driven by the announcement of a one-month delay in tariffs on automakers. This delay benefits companies whose vehicles comply with the United States-Mexico-Canada Agreement, offering them a temporary reprieve from potential supply chain disruptions.
The postponement provides automotive manufacturers a crucial buffer as they face potential disruptions in their supply chains due to increased costs of raw materials, parts, and finished goods. Although this delay does not address the underlying issues, it grants automakers additional time to adapt and prepare for future developments.
Ford Motor Co (F, Financial), with its stock trading at $9.59, is experiencing a noteworthy market movement. The stock's market capitalization stands at approximately $38.01 billion, placing it prominently within the consumer cyclical sector, particularly in the vehicles and parts industry.
Ford's valuation appears attractive with a price-to-earnings (PE) ratio of 6.57, which is below the industry median. The company's price-to-book (PB) ratio is 0.85, close to its three-year low, suggesting potential undervaluation. The stock carries a dividend yield close to a three-year high, emphasizing its appeal to income-focused investors. Furthermore, Ford's GF Value hints at the stock being modestly undervalued with a GF Value of $13.38.
Notably, Ford's financial health has some warning signs. The Altman Z-Score of 1.08 indicates distress, implying a possible risk of bankruptcy within the next two years. Additionally, the company has been issuing new debt, with $24.8 billion added over the past three years. However, it is not all negative as the Beneish M-Score suggests that Ford is unlikely to be a financial manipulator.
Despite these concerns, the company maintains certain strengths. Ford's return on equity (ROE) is notable at 13.46%, reflecting efficient use of equity capital. The stock's free cash flow yield of 17.73% further underscores its potential as a value investment. With a strategic focus on electric and combustion vehicles under its Ford and Lincoln brands, Ford continues to adapt to market trends.
