| Stock | Price | 52 Week Range | Marketcap | EPS | Dividend Yield | Chart (24H) | Sector | Employees | Last Updated |
|---|---|---|---|---|---|---|---|---|---|
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**Ford Motor Company** (NYSE: **F**) stands at a pivotal juncture, offering compelling growth prospects across the global automotive market. Today, we delve into Ford’s strategic initiatives, focusing on North America, China, and Europe, and estimate how these plans may radically boost Ford’s pre-tax income by the end of 2015. The article explores the exciting possibility of Ford achieving a 15% annual growth rate over three years—a tantalizing opportunity for investors chasing substantial returns.
At around $15.68 per share, **Ford** beckons as a strong value play. Investors are rightfully questioning whether the stock is fairly valued at this price, particularly given the company’s considerable upside potential. Ford’s robust footing in North America, aggressive expansion plans in China, and decisive strategies in Europe form the crux of this analysis. To start, we use Ford’s 2012 pre-tax income of $7.7 billion as our base. This number provides a higher than net income estimate due to uncalculated specific tax rates, setting the stage for our deep dive into potential growth.
Editor's Note: Analysis and insight for this article were originally sourced from our friends at **The Motley Fool**
Ford’s stronghold in North America is pivotal to its profit margins. The iconic F-Series pickup trucks remain a dominant force in the market, commanding significant demand. The U.S. automotive market is projected to exceed 16.4 million vehicles sold in the coming two years. With **Ford** holding a market share of 15.9%, the company could see significant gains from the sale of an additional 175,000 vehicles.
Higher sales figures translate directly to revenue increases. Given the average invoice for an F-Series pickup is around $36,000, maintaining an operating margin of 11% would boost Ford’s pre-tax income in North America by approximately $692 million. This addition alone could skyrocket Ford’s segment income to around $8.4 billion, underlying the critical importance of its North American operations in its growth story.
Moreover, the gradual rebound of the U.S. economy, bolstered by the housing industry’s recovery, ensures that demand for the F-Series remains robust. This positive market sentiment propels Ford’s operating margin, reinforcing the significant profitability from this region.
Analyst Ratings for North America
| Consensus Rating | Average Price Target | Current Price | Potential Gain | Number of Ratings |
|---|---|---|---|---|
| Moderate Buy | $15.25 | $14.03 | 8.70% | 13 |
Summary of Analyst Outlook: The analysts have a consensus rating of Moderate Buy for **Ford Motor Company** (NYSE: **F**). The average price target for the stock is $15.25, indicating an 8.70% potential increase from the current price of $14.03. The number of ratings supporting this outlook is 13.
China represents a vast arena for Ford’s growth ambitions. The company plans to double its market share from 3% to 6% by 2015, driven by the introduction of 15 new vehicles. This bold strategy aligns with the rapid expansion of China’s automotive market, expected to burgeon from 19 million to 35 million vehicles by 2020. Let’s conservatively estimate that China hits 24 million vehicles by 2015.
Even with a cautious market share estimate of 6% and an average vehicle invoice of $30,000, the revenue potential skyrockets to $43.2 billion. However, joint ventures will see their share, halving this revenue to around $21.6 billion. Applying a conservative 5% margin, considering the low margin profile of vehicles other than the F-Series, Ford’s pre-tax income in China could increase by $1.08 billion. This cautious evaluation bolsters our total 2015 estimate to nearly $9.5 billion in pre-tax income.
The ambitious rollout in China highlights Ford’s commitment to capitalizing on one of the world’s fastest-growing automotive markets, providing a substantial growth horizon and potentially vast returns.
Analyst Ratings for China
| Consensus Rating | Average Price Target | Current Price | Potential Gain | Number of Ratings |
|---|---|---|---|---|
| Moderate Buy | $15.25 | $14.03 | 8.70% | 13 |
Summary of Analyst Outlook: The analysts have a consensus rating of Moderate Buy for **Ford Motor Company** (NYSE: **F**). The average price target for the stock is $15.25, indicating an 8.70% potential increase from the current price of $14.03. The number of ratings supporting this outlook is 13.
Europe remains a challenging but crucial market for Ford. The company aims to mitigate and hopefully eradicate its losses in this region by the end of 2015. Currently grappling with approximately $2 billion in losses, Ford’s strategic initiatives to break even will significantly impact its bottom line.
Integral to this strategy is the role of Ford Credit in balancing these losses. Ford Credit’s consistent profitability, expected to contribute $2 billion in annual pre-tax profit until 2015, offers substantial support. This segment’s steady performance is crucial in cushioning the impact of European market struggles.
Ford Credit continues to be a reliable contributor. With an anticipated pre-tax profit of $2 billion annually, this financial arm underpins Ford’s broader financial stability. Enhanced economic conditions and a surge in vehicle loans are expected to drive incremental improvements, further fortifying Ford’s financial health.
Additionally, should the economy rebound robustly, the number of consumers taking loans for vehicle purchases is expected to rise, further boosting Ford Credit’s profitability. This could result in a total pre-tax income of $11.8 billion by 2015, which reflects a 15% annual growth rate over the three years, aligning closely with current analyst estimates of around 10%.
Analyst Ratings for Europe
| Consensus Rating | Average Price Target | Current Price | Potential Gain | Number of Ratings |
|---|---|---|---|---|
| Moderate Buy | $15.25 | $14.03 | 8.70% | 13 |
Summary of Analyst Outlook: The analysts have a consensus rating of Moderate Buy for **Ford Motor Company** (NYSE: **F**). The average price target for the stock is $15.25, indicating an 8.70% potential increase from the current price of $14.03. The number of ratings supporting this outlook is 13.
While structural costs and pension fund obligations pose potential caveats, Ford’s strategic positioning in its primary markets heralds an impressive growth trajectory. Achieving a 15% annual growth rate in pre-tax income over the next three years positions Ford as an enticing prospect for investors seeking substantial returns. In this journey of robust growth and expansion, Ford stands as a beacon for those chasing high-reward opportunities in the stock market.
Ford’s strategic maneuvers across North America, China, and Europe, backed by the steadfast performance of Ford Credit, paint a picture of potential prosperity and substantial gains. For investors keen on capturing the next big opportunity, Ford’s journey is one to watch closely.