Ford: Too Risky To Invest

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Summary

Ford faces multiple threats from sales declines and potential tariff impact.

The company has lost its edge in the autonomous vehicle technology game.

There are no signs that revenues from Mobility can ably offset revenue and margin declines in the short to medium term.

Reeling under the multiple threats of tariffs on Mexican imports, the escalating trade tensions with China, and overseas market setbacks, Ford Motor Company (F) isn’t exactly an inviting destination for auto investors.

 

Although the company has done a good job of highlighting its game plan of achieving $1 billion in EBIT growth between 2017 and 2021, has achieved a six-quarter breakthrough in Adjusted EBIT and EBIT margin, and is even gaining from better mix and pricing on a year-over-year basis, it still doesn’t inspire investor confidence. The simple reason is that there is little to show on the Mobility front, where much of its long-term future is invested.

Quarterly Revenues

Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Total 39.9 36.5 41.3 42.0 38.9 37.6 41.8 40.3

Source: Company Earnings Reports

First of all, Ford failed to become a leader in autonomous vehicle technology despite having all the time to do so, not to mention the confidence of at least one research firm. According to Navigant Research, Ford held a leadership position alongside General Motors (GM) back in early 2017, over whom it was believed to have a “Strategy” advantage over GM’s better “Execution” capabilities.

In the constantly-moving world of autonomous tech, that’s old news. Barely a year later, that same research firm had Ford lag behind a much stronger GM and being threatened by a cluster of would-be usurpers from both U.S. and European markets.

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