F - Ford

[awindenberger]

With their recent push into becoming a mobility company and developing autonomous vehicles, I've become more interested in Ford (F). The fact that they are trading at PE under 6 and have a close to 5% dividend also helps.

 

Unfortunately I don't have a good grasp of auto fundamentals. Can anyone here recommend any good deep dive-type write ups about the auto space, and Ford in particular. Auto sales seem to have peaked recently, and auto loan delinquencies are inching up. I'm curious how much of an effect this can have on earnings and cash flows.

 

Thanks in advance for thoughts and links!

[Junto]

Bought some Ford today. Boosting this idea.

[tylerdurden]

I wouldn't prefer F over GM or Fiat. Why would I? F is more expensive vs other two and also if you want to play "mobility" you should go w/ GM. They have all the pieces ready (car sharing, EV, Lyft, driverless) and have been investing for long time already. F is a latecomer to the game.

[Liberty]

Good podcast episode about systematic, multi-decade sexual harassment at Ford plants near Chicago. 

 

https://overcast.fm/+LHycPlspA

[Junto]

I put this in the buying today post in the general discussion category last week but I have been adding to Ford in the low to mid $10.00 range. Good dividend yield, low multiple to earnings, and I feel like they are getting the short end of the stick on their prospects for the future. I don't see them being that far behind and it will be a very long game.

[John Hjorth]

Andy,

 

When I see a fellow board member doing things, that nobody else here on CoBF do, it really catch my attention. Automakers seem here on CoBF nowadays to be soo in the doghouse - somehow similar to airlines.

 

For my part, I read an article yesterday about DAX-stocks, and it was pretty evident, that the three major German automakers [bMW, VW & Daimler] - at least on surface - appeared to be cheap right now. We're talking about forward P/E's in the range of 7.0 - 8.1 for those.

 

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So, personally, I would really appreciate, if you felt inclined by this post to elaborate a bit about your line of thinking about F here.

[nsa122]

I bought a chunk today...anyone else looked or bought?

I was convinced by the idea that F150 alone is a more profitable than all but a handful of companies, and they should be able to either fix or exit other unprofitable areas/regions.

[Foreign Tuffett]

I bought a chunk today...anyone else looked or bought?

I was convinced by the idea that F150 alone is a more profitable than all but a handful of companies, and they should be able to either fix or exit other unprofitable areas/regions.

 

I bought some $F yesterday and today. Agree on the F-150, which may be the single best franchise in all of auto-dom. The Ford Mustang also has a loyal following, and has been in continuous production for well over 50 years. I am bullish on the upcoming Ford Ranger light pickup as well.

 

More importantly, I think what new CEO Jim Hackett is doing makes sense. The market is punishing the stock for a lack of transparency around the announced restructuring, but in a company like Ford these sorts of things have to be done methodically, and announced internally first. Hackett also seems to be following Marchionne's (RIP) lead in stressing ROIC.

 

I'm not in love with the business by any means, and Bill Ford seems like kind of an idiot, but I do think the Ford family's desire for dividends will keep Bill from trying to do anything that is too aggressively stupid (as opposed to just mildly stupid). 

 

Most importantly, the stock is cheap and the balance sheet is solid.

[JayGatsby]

That's interesting re the F-150. How do you think about the reliance on credit as a means to generate sales? I always think of Conn's that sold mattresses to subprime customers on credit. The more credit they extended the higher sales went, until delinquencies started increasing and the model stopped working. Fully consolidated cash flow at F is negative while finance assets/liabilities continue to increase.

 

Not sure about elsewhere, but in Denver the Ford Explorer seems to be the current preferred police vehicle. It may be so much so that other people have stopped buying them, but I'd think selling to police is a pretty stable business.

[nsa122]

Seems like credit is the reality with any big ticket item whether for consumers or businesses. As long as they are prudent about it, it's another source of income.  If they're not prudent with it then of course it could be a problem, but I'm betting that they're on top of that risk for a while after 08/09.  Of the criticisms/doom/gloom I've read on Ford, credit risk hasn't been a big one.  Seems the more common ones are whether people will gradually stop buying cars due to ride sharing/autonomy, cyclical factors about a recession, and the fact that they continue to lose billions with these unprofitable regions indefinitely. I can't find your negative fully consolidated cash flow number; point me to that. I see positive cash flow numbers for the recent past.  I am thinking of Ford as an auto company with a specialized bank attached, and analyze each separately. If I'm wrong, someone please educate me.

[JayGatsby]

I can't find your negative fully consolidated cash flow number; point me to that. I see positive cash flow numbers for the recent past.  I am thinking of Ford as an auto company with a specialized bank attached, and analyze each separately. If I'm wrong, someone please educate me.

I oversimplified that a bit. Cash from operations plus cash from investing is negative. Basically growth in the finance subsidiary exceeds cash from the auto company. I don't disagree with your way of looking at it, I just worry about the auto company if the specialized bank runs into trouble.

[Castanza]

https://www.cnn.com/2019/09/10/business/ford-downgrade-junk/index.html

[RadMan24]

Ford might have a huge winner on their hands in the off road space. The Bronco hype is extremely strong, and going hard after Jeep. Bronco brand bringing out the: Bronco sport, 2 and 4 door Bronco, and eventually a Bronco Raptor and a Bronco Truck. There's no GM rival.

 

Could be a spark Ford has been missing for some time.

 

[LC]

Got a buddy trying to drop a cummins or a 7.3 in an old bronco.

 

I think the bronco is a good fit, but they should keep it slim. 2 door and a 4 door. Improve the F line if they want better trucks.

 

What they really need is a a better powerstroke that they can plop into their lineup. Almost everything after the 7.3 feels like it has more wires than metal.