Morningstar

Ford Ends 2020 With Solid Quarter but 2021 Uncertainty

Ford F finished 2020 with fourth-quarter adjusted diluted EPS of $0.34, nearly triple the prior year quarter’s $0.12 and well above the Refinitiv consensus of a $0.07 loss.

Securities In This Article
Ford Motor Co
(F)

Ford F finished 2020 with fourth-quarter adjusted diluted EPS of $0.34, nearly triple the prior year quarter’s $0.12 and well above the Refinitiv consensus of a $0.07 loss. Robust year-over-year improvements in pricing, particularly in North America and Europe, drove automotive adjusted EBIT up $1 billion to $1.26 billion and more than offset lost volume from the pandemic and the changeover to the new generation F-150 pickup. Adjusted free cash flow excluding Ford Credit nearly quadrupled to $1.9 billion thanks to higher distributions from Ford Credit and higher earnings. There was no word on resuming the dividend, but we would not be surprised if that news comes either at first-quarter earnings or in spring at a not yet scheduled investor day. Ford’s automotive liquidity is excellent at $46.9 billion, including cash and securities of $30.8 billion. Despite issuing $8 billion of bonds due to the pandemic, Ford finished 2020 with net automotive cash at $6.8 billion only $200 million less than at year end 2019.

We are not changing our fair value estimate, but we may increase it after rolling our model for the 10-K filing due this month. 2021 profit and capital expenditure guidance is better than what we were modeling. We also remain optimistic about the turnaround in costs possible under new CEO Jim Farley and new CFO John Lawler and strong demand for the Bronco, Bronco Sport, Mustang Mach-E, and the F-150, leading to improved market sentiment on Ford’s stock over the next few years. Furthermore, we believe Ford announcing it is increasing its combined electric and autonomous vehicle spending to $29 billion through 2025, which includes the combined approximately $9 billion cumulatively spent through 2020, will help Ford be competitive with GM’s EV plans and shows the market Ford is a serious EV player. A chip shortage is hurting Ford and management estimates as much as a $2.5 billion EBIT impact, but we like the direction Ford is heading.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

More in Stocks

3 Dividend Stocks for October 2024

These three dividend payers have an average yield of more than 4.5%.
David Harrell

Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue

Estee Lauder, Kraft Heinz, and Dollar General are our top consumer defensive stocks.
Erin Lash, CFA

Industrials: Many Stocks Overvalued After Q3 Outperformance

Our top stocks in this sector are Chart Industries, Wesco, and CNH Industrial.
Brian Bernard, CFA, CPA

About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

Sponsor Center