Ford Motor Company shares person outperformed the S&P 500 successful 2021, generating a year-to-date full instrumentality of 97.8 percent.
But aft astir doubling successful stock terms this year, investors whitethorn beryllium wondering if there’s immoderate worth near successful Ford stock.
Earnings: A price-to-earnings ratio (PE) is 1 of the astir basal cardinal metrics for gauging a stock’s value. The little the PE, the higher the value. For comparison, the S&P 500’s PE is astatine astir 29, astir treble its semipermanent mean of 15.9.
Ford’s PE is 20.1, importantly little than the S&P 500 mean arsenic a whole. Ford’s PE ratio is besides up 213.8 percent implicit the past 5 years, suggesting the banal is priced astatine the precocious extremity of its humanities valuation range.
Growth: Looking up to the adjacent 4 quarters, the S&P 500’s guardant PE ratio looks overmuch much tenable astatine conscionable 20.6. Ford’s guardant net aggregate of 8.9 is inactive overmuch little than the S&P 500’s, making Ford’s banal look undervalued.
Ford’s guardant PE ratio is besides little than a 3rd of its user discretionary assemblage peers, which are averaging a 30.2 guardant net multiple.
Yet erstwhile it comes to evaluating a stock, net aren’t everything.
The maturation complaint is besides captious for companies that are rapidly gathering their bottommost lines. The price-to-earnings-to-growth ratio (PEG) is simply a bully mode to incorporated maturation rates into the valuation process. The S&P 500’s wide PEG is presently astir 0.9; Ford’s PEG is 0.26, suggesting Ford is importantly undervalued aft accounting for its growth.
Price-to-sales ratio is different important valuation metric, peculiarly for unprofitable companies and maturation stocks. The S&P 500’s PS ratio is presently 3.15, good supra its semipermanent mean of 1.62. Ford’s PS ratio is simply a miniscule 0.48, astir 85 percent little than the S&P 500 mean arsenic a whole.
Finally, Wall Street analysts spot small worth successful Ford banal implicit the adjacent 12 months. The mean expert terms people among the 20 analysts covering Ford is $17.50, suggesting 0.7 percent upside from existent levels.
The Verdict: At its existent price, Ford banal appears to beryllium somewhat undervalued based connected a sampling of communal cardinal valuation metrics.
By Wayne Duggan
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