Back in early 2015, Ford Motor Company had an F-150 problem — it couldn’t make enough F-150s to keep up with consumer demand. New F-150s raced out of the lot in 9-12 days, much faster than the typical truck.
That was noteworthy. The energy efficient all-aluminized F-150 pickup came to the market at a time when oil fuel prices were falling sharply, making efficiency less of a concern for thrifty consumers.
Apparently, there were other favorable factors that must have helped F-150 get to a good start. Like a strong US economy, ultra low financing rates, and Ford’s mastery of the buzz.
Still, Ford’s inability to keep up with demand for its highly profitable vehicle hurt its financial performance for the first quarter of 2015.
Ford’s Financials as of 2/4/2015
| Company | Current Price | Forward PE | Dividend yield | Operating Margins | Qtrly Revenue Growth (yoy) |
| Ford | $15.99 | 8.47 | 4.10% | 4.36% | -3.10% |
| GM | 35.95 | 8.21 | 3.7 | 1.17 | 0.70 |
Source: finance.yahoo.com
Now, the problem is fixed. A pick up in F-150 sales has helped the company report strong North American operating margins, which exceeded those of both General Motors and Fiat Chrysler Automobiles NV.
Ford’s sales were also strong in China, and in Europe -- where austerity has been hurting auto sales -- helping overall sales and profit margins improve from a year earlier.
Ford’s Financials as of 4/28/2016
| Company | Current Price | Forward PE | Dividend yield | Operating Margins | Qtrly Revenue Growth (yoy) |
| Ford | $13.64 | 6.60 | 4.26% | 5.38% | 12.20% |
| GM | 31.59 | 5.36 | 4.69 | 4.53 | -- |
Source: Finance.yahoo.com
In recent years, the company has built a reputation for quality and innovation, rolling out new products, strengthening its brand, and market position.
Ford’s drive for quality has been evidenced by a number of endorsements. The car company’s 2015 F-150 SuperCrew model received the highest 5-Star score endorsement for Overall Safety from the National Highway Traffic Safety Administration (NHTSA). In 2015, the F-150 was named top truck in the North American International Auto Show in Detroit. In 2013, Ford was America’s best-selling vehicle brand for the fourth consecutive year, and the Ford F-Series continued as the country’s best-selling truck for the 37th year in a row and best-selling vehicle for the 32nd consecutive year.
Ford’s drive for innovation has been evidenced by the introduction of scores of new models, like the new Explorer and all-new Lincoln MKX in North America; the new C-MAX and Grand C-MAX and the all-new S-MAX and Galaxy in Europe; the all-new three-row Edge in China and new Ranger in Asia Pacific; and the all-new Taurus in China.
The bottom line: Ford is turning the right corner, and investors are taking notice.
Still, Ford’s stock is sensitive to domestic and global business cycles, and to economic policy changes (e.g., interest rates). That’s why it is for long-term investors with high-risk tolerance.
Disclosure: I own Ford shares
