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Ford Motor (NYSE: F) shares have weakened from $14.36 to $10.90 since early December 2022, with the current price around $11.63.
Ford reported strong third-quarter earnings results in October, but rising interest rates, a gloomy macro backdrop and higher input costs have put pressure on auto stocks again in December 2022.
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Ford will once again raise the price of its F-150 Lightning Pro electric truck
Ford’s business showed improvements in the third fiscal quarter, and the company reported strong earnings results in October. Total revenue increased 12% Y/Y to $37.2 billion, while GAAP EPS was $0.30.
The company’s management is optimistic about the coming quarters in terms of growth and expects cash flow to be sufficient to fund growth priorities in the future planning period.
Adjusted free cash flow for the full year should be between $9.5 billion and $10 billion — a range of $5.5 billion to $6.5 billion based on the strength of the company’s automotive operations.
It’s also worth noting that the company’s management expects full-year adjusted EBIT of about $11.5 billion, roughly 10% higher than in 2021.
However, Ford Motor shares are mainly under pressure from the US Federal Reserve’s aggressive monetary policy, geopolitical uncertainty and more. Production Expenses.
Investors continue to worry that an aggressive Federal Reserve will push the economy into a deeper recession, which will drag down corporate earnings and stock markets.
According to Deloitte Insights, there is a 45% correlation between the depth of the recession and reduced output in manufacturing. Automotive industry.
Ford Motor continues to focus on accelerating the adoption of electric vehicles, and costs are rising quickly for automakers investing heavily in their respective EV transitions.
The company has already announced that it will raise the price of its F-150 Lightning Pro electric truck in 2023.
The positive is that Ford has the ability to mitigate cost pressures against smaller peers. Market capitalization At $46 billion, the company’s shares are worth a fair share.
Ford trades at less than three times TTM EBITDA, and compared to Toyota Motor Corp. (NYSE: TM ), Ford is cheaper on a price-to-sales basis.
According to the price-to-sales ratio (market cap/earnings), Ford shares are trading at 0.32, which is almost three times lower than Toyota Motor Corporation’s price-to-sales ratio, which is trading at 0.87 P/S. .
Despite this, investors should assume that Ford’s stock will remain at lower price levels if the U.S. stock market enters a more significant correction phase.
Technical analysis
Ford Motor shares have weakened 50% since January 13, 2022, and the downside risk is far from over.
An important support level is $10, while $14 represents the first resistance level. If the price drops below $10, that’s a “sell” signal, and we have an open at $8 or below.
Conversely, if the price rises above $14, the next target could be resistance at $16.
Summary
Ford Motor shares have weakened 50% since January 13, 2022, and the downside risk is far from over. Rising interest rates, gloomy macro backdrop and high input costs continue to weigh on the auto industry.
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