The caller quality has been messy. On Friday, Ford Motor (F) sold different 7M shares of electrical conveyance start-up Rivian Automotive (RIVN) for astir $188M. Ford had sold 8M shares of RIVN earlier successful the week pursuing the expiration of that firm's IPO lockup period. Readers volition retrieve that Rivian went nationalist past November astatine an IPO terms of $78, and proceeded to commercialized supra $179 per stock wrong days. The mean terms for this astir caller sale, according to the regulatory filing, was $26.88. Ford is inactive believed to beryllium agelong 87M shares of Rivian.
In addition, connected Friday, Wells Fargo expert Colin Langan downgraded some General Motors (GM) and Ford Motor, portion drastically reducing his people terms for some names. Langan sees rising costs arsenic good arsenic US substance system regularisation arsenic increasing headwinds for some firms. Langan's people terms for Ford is present $12, down from $25. Investors looking for consolation tin constituent toward Langan's comparatively debased standing astatine TipRanks compared to his peers. Tip Ranks rated Langan astatine somewhat much than 1 prima (out of five) and places him successful 5,726th spot retired of the 7,883 analysts rated by the service.
Earnings & Guidance
Ford posted the firm's archetypal 4th fiscal results backmost connected April 27th. The steadfast enactment adjusted EPS of $0.38 to the portion connected gross of $34.5B. The adjusted net people bushed Wall Street by a penny, portion the gross fig (-4.7% y/y) landed precisely upon consensus. On a GAAP basis, this gross provided for a nett nonaccomplishment of $3.1B for a GAAP EPS nonaccomplishment of $0.78. Cash travel from operations was a nasty $-1.1B, severely missing estimates for $+2.8B. Adjusted escaped currency travel landed astatine $-600M, besides severely missing the $+744M that Wall Street was looking for.
However, and this is simply a large however... The steadfast stated astatine that clip that it continues to expect afloat twelvemonth 2022 adjusted EBIT of $11.5B to $12.5B, which would beryllium up 15% to 25% from 2021. The steadfast besides reiterated afloat twelvemonth guidance for adjusted escaped currency travel to $5.5B to $6.5B. It should besides beryllium noted that Ford's mediocre 4th was "driven" by astir 53K vehicles that were each but completed, with the objection of indispensable semiconductor chips indispensable for these vehicles to determination toward delivery.
Ford ended the archetypal 4th with a nett currency presumption of $28.6B. Current assets amounted to $106.1B, including inventories worthy $14.6B. Current liabilities totaled $90.4B astatine that time, including $2.6B worthy of Long-term indebtedness labeled arsenic current. This near Ford Motor with a existent ratio of 1.17, which is good for a ample manufacture similar this. The firm's speedy ratio stands astatine conscionable 1.01, but to beryllium fair, that is simply a passing grade, albeit conscionable barely, successful my book.
Total assets adhd up to $253B. This includes nary introduction for "goodwill" oregon "other intangibles". That means that each of Ford's assets are either physical, oregon tin astatine slightest beryllium quantified. We similar that. Total liabilities little equity travel to $207.9B, including $88.4B successful agelong word debt. That's an eyesore and prevents maine from enthusiastically endorsing this equilibrium sheet. That said, tangible publication worth works retired to $11.19 per share, not excessively acold beneath Friday's past merchantability of $13.50. That is striking.
Ford Motor remains mired successful a downtrend contempt Friday's rally.
Readers volition enactment that (forget astir rallying backmost to January's highs) conscionable to retrace 38.2% of the January done past Thursday's selloff, these shares would person to saw done their 21 time EMA ($14.22), 50 time SMA ($15.42), and 200 time SMA ($16.76). That's a heck of a batch of wood to cut.
On the different hand, the shares commercialized astatine 7 times guardant looking earnings, trading astatine 1.2 times tangible book, yielding 2.22%. These metrics, indebtedness and rising expenses aside, marque the steadfast look inexpensive.
Then there's the energetic, enthusiastic CEO who has changed the losing civilization astatine the steadfast to thing much positive. It is Jim Farley who has driven the firm's enactment successful processing electrical vehicles with a absorption connected replicating vehicles that regular radical already similar to thrust specified arsenic sports cars and pick-up trucks. All portion not forgetting to supply the nationalist with work-intensive benignant vehicles.
I really, truly similar Farley. I really, truly bash not similar what Ford Motor arsenic good arsenic each conveyance manufacturers (all industrials) look successful the adjacent to short-term future. I don't deliberation I request a car institution connected my publication close now. I volition proceed to commercialized Tesla (TSLA) , but I haven't held a presumption successful that banal for much than a time oregon 2 successful weeks. That said, I bash judge that the risk/reward proposition is starting to deliberation astir smiling favorably connected Ford. Is it clip to leap backmost in? For me, the reply is not yet.
That said, a hazard averse capitalist mightiness instrumentality connected the July 1st $13.50 calls for a unsmooth $0.74 and wage for astir of it by penning (selling) the July 1st $12.50 puts for astir $0.60. The banal goes north? The trader tin hop successful astatine $13.50 successful aboriginal July. The price? The trader volition beryllium exposed to imaginable equity hazard astatine $12.50 astatine that time. That's a 7.4% discount versus Friday's close.