Semiconductor Shortages Hit Ford's Quarterly Numbers

According to information released by Covid following the 2018 annual update, shortages of semiconductors and components were a contributing factor to lower than usual quarterly numbers from Ford, along with higher expenses.

   FORD logo seen on Ford vehicle parked in Krakow center. On Tuesday, July 05, 2022, in Krakow, ... [+] Poland. (Photo by Artur Widak/NurPhoto via Getty Images) 
  NurPhoto via Getty Images
On Tuesday, July 05, 2022, in Krakow, ... Poland, the Ford logo was seen on a Ford vehicle parked in the city center.

Ford stock has declined by around 17% over the past month and is down by about 46% year to date, significantly underperforming the S&P 500. There are a few factors weighing Ford’s stock down: firstly, the semiconductor and component supply issues following the Covid-19 reopening have hurt Ford's overall deliveries in recent quarters, while also putting pressure on its costs; for example, over Q1 2022, Ford's revenues were about 15% below 2019 levels.Secondly, there are macroeconomic concerns as well; with inflation surging, the Federal Reserve has been raising interest rates at a more aggressive pace and this is quite likely to put pressure on U.S economic growth.An economic contraction typically results in weaker sales and earnings for automotive companies and this could also be putting pressure on Ford stock.

So, is Ford stock a buy at its market price of $11 per share? Now although automotive stocks could remain volatile given the possibility of a U.S. recession, we think there is a lot of margin for error in Ford stock. Ford's sales were already quite depressed over 2020 and 2021 (U.S. sales of around 2 million vehicles over 2021 and 2022, compared to 2.8 million in 2019) due to the semiconductor shortage, so there may not be too much downside even in an economic downturn. There are also signs that the automotive semiconductor shortage could be easing, as the demand from the tech industry cools and this could also help Ford boost supply. Moreover, Ford actually appears to be faring a bit better than its U.S peers recently-in June 2019 U S sales rose by 31 5% year-over-year with US market share expanding to 12 9%.Ford's EV transition is also progressing reasonably well: EV sales jumping 77% percent from a year ago to 4353 for June; deliveries of F 150 Lightning pickup truck rising from about 460 units in May to roughly 1 800 units in June .Ford intends t produce over 2million electric vehicles per year by end 2026 which would translate into roughly third its global production

Ford's valuation is also compelling. The stock trades at about 5.5x consensus 2022 earnings. Ford also has a relatively attractive dividend of $0.40 per share, translating into a yield of 3.5%. We value Ford stock at about $19 per share, which is over 70% ahead of the current market price.See our analysis on Ford F Valuation - Is F Stock Expensive Or Cheap? from Forbes and article here. For more details on what's driving our price estimate for Ford, check out our dashboard on Ford Revenues: How Does F Make Money? For more information on Ford's business model and revenue trends, see our analysis on our dashboard.

With inflation rising and the Fed raising interest rates, Ford has fallen 46% this year. Can it drop more? See how low can Ford stock go by comparing its decline in previous market crashes. Here is a to;;3Mzr#p8|1!7Y|5!f9|0!I6b,c9dg#l6xA{6h from forbes article "How Low Can Stocks Go During Market Crash?"

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   F Return Compared With Trefis Multi-Strategy Portfolio