Ford Is Still Undervalued, But its New CEO May Change This

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F stock is worth at least $8.40, or 22% more than today, based on a resumption of a 60 cents annual dividend next year

Ford (NYSE:F) continues to look undervalued, mainly because of a potential return of its dividend next year. And with a new CEO coming later this year, F stock is definitely one to watch for a comeback.

Ford (F) logo on a steering wheel.

Source: Proxima Studio /

In my last article on F stock, I wrote then that it might pay a 15-cents-per-share quarterly dividend sometime next year. This will be half of its prior dividend but will give the stock a very high 8.7% dividend yield. Of course, by that time F stock will likely be much higher. Its average four-year dividend yield has been 7.14%. That implies the stock could rise to $8.40 per share or 22% above today’s price.

There are other catalysts that likely will help move the stock higher.

Ford Is Revamping Strategy and Management

For example, Ford plans on producing an EV version of its popular F-150 truck. Ford plans on shutting an auto plant in Michigan next month to prepare for a redesigned F-150. In addition, it plans on building a new facility at a Dearborn plant to make an EV version of the F-150.

A new CEO is taking the reins in October. Jim Hackett, the present CEO, 65, and a Ford lifer, unexpectedly agreed to step down on Aug. 4. He has been there only since 2007. Barron’s quoted sources as saying that Wall Street didn’t like him. Ford’s net margins are still half of General Motors (NYSE:GM).

Jim Farley, presently COO will take over. He may have already effectively taken over. On Sep. 2, Ford said it was going to reduce its salaried force by offering early retirement to over 1,400 people. Barron’s says the new CEO wants to “streamline operations and get profit margins up.”

The company did not say how much money the cuts would generate. The company employs 190,000 so this number of cuts probably won’t make a large dent in its plans to reduce $11 billion over the next several years. According to CNBC, the new COO says making 10% profit margins remains his priority.

He also will likely focus on getting the company to move solidly into electric vehicles. In effect, they are playing catch-up with Tesla (NASDAQ:TSLA) with its Cybertruck model coming out next year.

This is despite having invested $500 million last year in an EV truck startup rival, Rivian. Ford also partnered last July with Volkswagen (OTCMKTS:VWAGY) in an autonomous driving technology company called Argo AI, based in Pittsburgh.

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