Previously, when Ford (NYSE: F
) was trading in double digits, it was written the stock could be headed back into single digits.
This has happened as Ford Motor Co. is now trading under $9 a share. It could be headed lower, along with other stocks in the industry such as General Motors (NYSE: GM
) and Toyota Motor (NYSE: TM
In the previous article from September 28, 2011, "Ford Could be back at 2008-2009 Price Levels
," it was written that, "Ford has a debt to equity ratio of 18.56. This is truly staggering as
the book value of Ford is only $1.58 a share. The effects of this
massive amount of debt prevails throughout the balance sheet and income
statement, to the detriment of the share price. which is near the year
The price to book ratio of Ford is 7.28. Earnings per share
are down on a quarter by quarter basis. The stock is down about 3% for
the week, more than 24% for the quarter, and almost 40% year to date.
Ford is trading below its 20, 50 and 200 day moving averages.
late 2008 and early 2009, Ford was trading for around $1.50 a share.
Its high for the year is $18.97. The closing price yesterday was
Its margins do not offer much hope for stock price
increases anytime soon. Ford has an operating margin of 4.60%. The
profit margin is 5.22%. The gross margin is 14.92%. Return on assets
is 3.93%. Return on investment is 6.06%. Insider transactions at Ford
are a negative 3.02%. There is a short float of 4.02%."
In addition to those concerns, which are still valid,sales are dropping in Europe, which is also plaguing General Motors and Toyota Motors. Despite the rise in the stock market yesterday, the situation in Europe will not be improving anytime soon. Therefore, do not look for any stock price improvement for Ford Motor, Toyota Motor or General Motors anytime soon. However, these companies will not be filing for bankruptcy. Ford Motor and Toyota Motor survived The Great Recession. General Motors did not. The companies are here to stay.
Ford Motor is becoming more attractive with its dividend yield. It should be heading lower, which will make the dividend income being received at an even high rate. As it proved during The Great Recession, Ford Motor will survive. The stock is now headed back down to where it will be a buy that allows for triple digit returns, as it did coming out of The Great Recession.