Tradebots bought the dip on Ford Motor Company

Tradebots issued a buy alert on Ford Motor Company (F: NYSE) on 04/07/2022. We entered a long position at $14.62. Ford share price was at a high of $25.87 at the beginning of 2022. Since then a series of bad news has caused  share price to drop to current level.

Buy the fear on Ford
Buy the fear on Ford

 

We find the current valuation of Ford attractive. This is a valuation play. With PEG ratio at 0.38, the share price of Ford has a lot of room to grow.

Market Cap (intraday) 66.95B
Enterprise Value 156.85B
Trailing P/E 3.74
Forward P/E 7.89
PEG Ratio (5 yr expected) 0.38
Price/Sales (ttm) 0.49
Price/Book (mrq) 1.38
Enterprise Value/Revenue 1.15
Enterprise Value/EBITDA 5.09

 

The recent bad news has caused shared price to drop:

The chip shortage comes home to roost: Ford suspends operations at a major U.S. plant as the shortage continues to batter the auto industry

Ford stock falls after March vehicle sales drops nearly 26% from a year ago

The main reason for sales drop is because Ford running out of inventories to sell due to chip supply issues.

Q1 2022 sales estimate: 431,123, down 17% vs. Q1 2021.

Results: Ford sold 432,132 vehicles in Q1, down roughly 17%. The global chip shortage continues to create challenges, Ford said. But it reported improving production and inventories in March.

“Ford is ready to deliver and positioned well for spring sales growth,” said Andrew Frick, a Ford vice president of sales.

The demand for buying cars are still strong. Some used cars now cost more than new ones. Here’s Why.

The issue appears to boil down to availability. Brand new cars can take up to 10 months to deliver. Used cars can be purchased right now—if car buyers are willing to pay a premium.

While the situation is unusual, it has been a long time coming. Global automotive production has been constrained for more than a year due to a shortage of semiconductors. That has driven down new car inventories, pushed up new and used car prices, and left car buyers with an inability to haggle.

The auto market is now essentially a car seller market. Car manufacturer including Ford now should have a lot more pricing power than before and should have a lot of ways to improve profit margin in the years ahead.

With current investors expectation almost at all time now as indicated by its PEG ratio, while Ford internally is ready to ramp up sales growth. We believe it’s a good time to invest in Ford.

“Ford is ready to deliver and positioned well for spring sales growth,” said Andrew Frick, a Ford vice president of sales.

 

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