Should you buy Ford stock? March 2023
- 5 months ago
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Historically, automakers have been notoriously risky investments due to the cyclical nature of the industry and the slim profit margins of products. The rise of electric vehicles means the high level of competition in the industry is only going to continue. And recent data suggests a likely reduction in spending power amongst consumers.
One of the main challenges that Ford is facing is a low gross margin of 11%, which leads on to the low operating margin. Such a low margin doesn’t provide much room for discounts and price cuts, something that other companies (such as Tesla) have been doing to increase market share.
However, Ford does produce in demand products. The Ford F-Series has been America’s best selling truck 46 years in a row, and Fords 150 lightning has been America’s best selling EV truck since launch.
Overall, Ford appears to be making progress and the stock provides an attractive dividend for investors. However, the company operates in a difficult industry, has high costs as well as entrenched issues with labor unions. The next year or so maybe tricky for Ford, as higher interest rates make auto loans more expensive and consumers cut back on discretionary spending.
For these reasons I give the stock a neutral rating. But these are my personal opinions not financial advice and I have no position in Ford stock. For more detailed investing ideas, visit our website overlookedalpha.com.
Historically, automakers have been notoriously risky investments due to the cyclical nature of the industry and the slim profit margins of products. The rise of electric vehicles means the high level of competition in the industry is only going to continue. And recent data suggests a likely reduction in spending power amongst consumers.
One of the main challenges that Ford is facing is a low gross margin of 11%, which leads on to the low operating margin. Such a low margin doesn’t provide much room for discounts and price cuts, something that other companies (such as Tesla) have been doing to increase market share.
However, Ford does produce in demand products. The Ford F-Series has been America’s best selling truck 46 years in a row, and Fords 150 lightning has been America’s best selling EV truck since launch.
Overall, Ford appears to be making progress and the stock provides an attractive dividend for investors. However, the company operates in a difficult industry, has high costs as well as entrenched issues with labor unions. The next year or so maybe tricky for Ford, as higher interest rates make auto loans more expensive and consumers cut back on discretionary spending.
For these reasons I give the stock a neutral rating. But these are my personal opinions not financial advice and I have no position in Ford stock. For more detailed investing ideas, visit our website overlookedalpha.com.