Stock Analysis

At US$12.61, Is Ford Motor Company (NYSE:F) Worth Looking At Closely?

NYSE:F
Source: Shutterstock

Ford Motor Company (NYSE:F) received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$15.35 at one point, and dropping to the lows of US$11.75. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Ford Motor's current trading price of US$12.61 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ford Motor’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Ford Motor

What Is Ford Motor Worth?

Ford Motor appears to be overvalued by 24% at the moment, based on my discounted cash flow valuation. The stock is currently priced at US$12.61 on the market compared to my intrinsic value of $10.15. This means that the opportunity to buy Ford Motor at a good price has disappeared! But, is there another opportunity to buy low in the future? Given that Ford Motor’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Ford Motor generate?

earnings-and-revenue-growth
NYSE:F Earnings and Revenue Growth September 17th 2023

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Ford Motor's earnings over the next few years are expected to increase by 80%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in F’s positive outlook, with shares trading above its fair value. At this current price, shareholders may be asking a different question – should I sell? If you believe F should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on F for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for F, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Every company has risks, and we've spotted 3 warning signs for Ford Motor (of which 1 is significant!) you should know about.

If you are no longer interested in Ford Motor, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Valuation is complex, but we're helping make it simple.

Find out whether Ford Motor is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.