This article presents the market valuation of Ford Motor (F)’s stock.
Particularly, we will look at Ford Motor’s stock valuation from the perspective of multiple ratios which include the price to sales, price to EBIT, price to profit, price to cash flow, and price to book value.
We will look at these ratios over a certain period to see how the company’s stock has been valued from a historical standpoint.
Let’s start with the following topics!
Ford’s Market Capitalization
Let’s first look at Ford’s market cap before diving into the ratios.
The chart above shows Ford’s historical market capitalization for the period from 2021 to 2023.
Over the past 2 years, Ford’s market cap has remained roughly flat at $47 billion as shown in the chart between 2021 and 2023.
However, during the 2-year interval, we can see that Ford’s market cap surged to a massive $100 billion in early 2022.
The $100 billion market capitalization was the highest value that Ford Motor has reached between 2021 and 2023.
On the other hand, the lowest market capitalization that Ford Motor’s stock has reached was $44 billion within the 2-year interval, a value that is not much far off from its current market valuation of $47 billion.
On average, Ford Motor’s market valuation was around $59 billion between 2021 and 2023.
Therefore, Ford’s current market cap of $47 billion reported as of Feb 2023 was actually below the 2-year average of $59 billion.
Ford’s Price To Sales Ratio
Ford’s price-to-sales or revenue ratio hit a record high of roughly 0.75X in early 2022 at the same time when the market cap was at a record high of $100 billion.
While Ford’s market cap was flat during the 2-year interval, the price-to-sales ratio had declined slightly to only 0.30X as of Feb 2023.
Ford’s average price-to-sales ratio was around 0.43X between 2021 and 2023.
Therefore, Ford’s current stock valuation of 0.30X from the perspective of revenue was around 30% below its 2-year average.
Ford’s Price To Book Value Ratio
Ford’s price-to-book value ratio totaled only 1.1X as of Feb 2023, which was around 27% below its 2-year average of 1.51X.
Compared with the 2-year high of 2.75X, Ford Motor’s current price-to-book ratio of 1.1X was 60% lower.
Ford’s Price To EBIT Ratio (Non-GAAP)
EBIT stands for earnings before interest and taxes. In other words, EBIT also represents operating income or profit.
However, in Ford’s case, the EBIT is a non-GAAP measure that is adjusted by Ford to exclude irregular, special, and non-core expenses and income.
That said, Ford’s ratio came in at 4.55X as of Feb 2023, roughly 40% lower than the 2-year average and a massive 79% lower than the 2-year high between 2021 and 2023.
Ford’s price-to-EBIT ratio 2-year low was roughly 4.0X, recorded in Q4 2022.
Therefore, Ford’s current price-to-EBIT ratio of 4.55X was only about 10% higher than the 2-year low.
Ford’s Price To Net Profit Ratio
Ford’s valuation with respect to one of the company’s profitability metrics took a beating as of Feb 2023.
As seen, the ratio tumbled to zero as of 2023.
The reason is that Ford’s net income or net profit was in the red as of 4Q 2022 on a TTM basis, and therefore the irrelevant valuation ratio.
While Ford’s price-to-net-profit ratio was nil as of 2023, its 2-year average was roughly 10.0X between 2021 and 2023.
Moreover, Ford’s price-to-net-profit ratio was at a record high of 35X in early 2022 during the 2-year interval.
Ford’s Price To Earnings Ratio (Non-GAAP)
Similar to the non-GAAP EBIT, Ford’s non-GAAP earnings also were adjusted by the company to exclude certain items that the company deems not related to core operations such as special one-off expenses or income, restructuring, COVID-related, etc.
That said, Ford’s PE ratio came in at only 6.4X as of Feb 2023, which was 46% lower than the 2-year average and a massive 83% lower than the 2-year high.
Apart from that, Ford’s PE ratio also has been on a decline over the past 2 years, reaching a record low as of Feb 2023.
Ford’s Price To Operating Cash Flow Ratio
While most valuation ratios have been on a decline, Ford’s stock valuation with respect to operating cash flow has been on the rise as shown in the chart above.
As seen, Ford’s price-to-operating-cash-flow ratio totaled 6.9X as of Feb 2023, one of the new highs reported in 2023.
Compared with the 2-year average, Ford’s current valuation ratio was 70% higher.
On the other hand, Ford’s current valuation ratio was 12% lower compared with the 2-year high.
Ford’s Price To Free Cash Flow Ratio
Ford’s free cash flow is adjusted by the company to exclude certain items, including Ford Credit’s cash flow, and items not related to the automotive segment.
While Ford’s valuation with respect to operating cash flow has been on the rise, the ratio has been declining with respect to free cash flow as shown in the chart above.
As seen, Ford’s price-to-free-cash-flow ratio came in at only 5.2X as of Feb 2023, a record 73% below its 2-year average.
Compared with the 2-year high, Ford’s current valuation with respect to free cash flow was even lower, down 94% from the 2-year high.
To recap, Ford’s stock valuation has been on a decline with respect to several metrics, including revenue, gross profit, operating profit, and cash flow between 2021 and 2023.
While Ford’s fundamentals have been improving, its valuation has been on a decline.
Notes to Readers
You can get more valuation metrics, such as in a different interval, and other features such as average valuation, and high and low valuation in a given period, ie. 6-month, 1-year, and 2-year.
Apart from the historical valuation, you also get to see the forward valuation and do a comparison between the latest and forward valuation ratios to see how far off Ford’s latest price has gone with respect to historical and forward ratios.
In addition, you also get to analyze Ford’s dividend affordability through the dividend to adjusted EBIT and adjusted free cash flow ratios.
For your information, I just found out that Ford’s special dividend declared in 1Q 2023 was not sustainable.
References and Credits
1. All financial figures in this article were obtained and referenced from the following links:
The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.
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