F (Ford Motor Co) Stock Analysis: Deep Value or Justified Weakness?
Overview
This stock is trading at extremely low valuation multiples with a P/E of 6.38 and a P/S of 0.20, making it a potential deep value play. However, recent performance is negative, and debt is high (D/E: 3.59). Is this a bargain buy or a trap? Let's analyze its fundamentals, technicals, and trade setup.
Fundamental Analysis
Valuation Metrics
- P/E Ratio: 6.38 (Undervalued compared to market average)
- Forward P/E: 5.64 (Stock remains cheap based on future earnings)
- Price-to-Sales (P/S) Ratio: 0.20 (Extremely low, suggesting undervaluation)
- Price-to-Book (P/B) Ratio: 0.82 (Trading below book value, a rare opportunity)
📌 Key Takeaway: The stock is deeply undervalued compared to its earnings, sales, and book value.
Profitability & Growth
- Gross Margin: 8.33% (Weak, indicating pricing pressure)
- Operating Margin: 2.75% (Thin margins for an S&P 500 company)
- Net Profit Margin: 3.18% (Low but still positive)
- EPS Growth (Y/Y): 35.92% (Strong earnings growth)
- EPS Growth (Next 5Y): 162.64% (High growth expectations)
📌 Key Takeaway: Earnings growth is accelerating, but low margins indicate weak pricing power.
Financial Strength
- Current Ratio: 1.16 (Just above 1.0, meaning it can meet short-term obligations)
- Debt/Equity Ratio: 3.59 (High leverage, raising financial risk)
- Short Interest: 3.03% (Low short squeeze potential, not overly shorted)
📌 Key Takeaway: Debt is a major risk, but the company is still financially stable.
Technical Analysis
Trend & Momentum
- SMA 20 (Short-Term): -5.23% (Bearish)
- SMA 50 (Medium-Term): -6.49% (Bearish)
- SMA 200 (Long-Term): -15.90% (Still in a strong downtrend)
- RSI (14): 42.38 (Neutral, neither overbought nor oversold)
- Beta: 1.60 (Moderate volatility, moves faster than market)
📌 Key Takeaway: The stock remains in a downtrend, and there are no clear reversal signals yet.
Support & Resistance Levels
- 52-Week High: $14.85 (-37.17% decline)
- 52-Week Low: $9.10 (+2.53% from current levels)
- Support Level: $9.10 - $9.20 (Key accumulation zone)
- Resistance Levels: $10.31, $12.00 (Short-term targets)
📌 Key Takeaway: The stock is near its 52-week low, meaning downside may be limited.
Trade Setup & Plan
📌 Entry Point
- Buy Zone: $9.10 - $9.30 (Accumulation area)
- Confirmation: Look for increased volume near support.
🎯 Profit Targets
- Target 1: $10.31 (+10%) (First resistance level)
- Target 2: $12.00 (+28%) (Medium-term resistance)
- Target 3: $14.00 (+50%) (If sentiment improves)
🛑 Stop-Loss Strategy
- Conservative Stop: $8.90 (Break of support signals further downside)
- Aggressive Stop: $8.50 (Last resort stop-loss for higher risk tolerance)
💡 Risk-Reward Ratio: ~3:1
(Good potential return with manageable risk.)
Final Verdict: Buy or Avoid?
✅ Why Buy?
- Extremely undervalued (P/E 6.38, P/S 0.20)
- Strong earnings growth (EPS +35.92% YoY)
- Near key support levels (Limited downside)
❌ Risks to Consider
- Weak margins (Gross Margin 8.33%)
- High debt (D/E 3.59) (Financial risk)
- Stock is still in a downtrend
