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Ford Vs GM’s Stocks – Margin, Profit, Cash Flow And Debt

Stock investment. Pixabay Image.

Ford Motor (NYSE:F) and General Motors (NYSE:GM) are major players in the automotive industry not just in the U.S. but also globally.

They are public companies, with stocks traded on the New York Stock Exchange (NYSE).

Recently, both Ford and GM have embarked on an ambitious plan that will take both companies to become fully electric vehicle (EV) manufacturers in the near future.

After the debut of the respective EV roadmaps, both Ford and GM’s stocks have been on a tear, with prices reaching record highs as of Jan 2022.

Therefore, should you buy GM and Ford’s stocks now? Maybe.

However, if you wanted to choose only 1 company to invest in, which one will you pick? Ford Motor or General Motors?

In this article, we will do a comparison between Ford and GM’s stocks from the perspective of several metrics, including margins, cash flow, and debt so that readers can decide which company is more superior.

Without further delay, let’s head out to the following topics!

Vehicle Sales And Delivery Numbers

Ford vs GM in vehicle sales

Ford vs GM in vehicle sales

* Vehicle sales and deliveries data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

Let’s first look at Ford and GM’s vehicle sales or delivery numbers as shown in the chart above.

The vehicle sales data for both GM and Ford is based on the wholesale figures.

That said, Ford’s vehicle sales and delivery numbers have been much higher than that of General Motors in the last 5 years.

As of fiscal 3Q 2021, Ford delivered about 4.1 million vehicles while GM delivered only 3.1 million units on a TTM basis.

Therefore, Ford’s vehicle sales were about 1 million units or 32% more than what GM achieved in the same period.

A notable trend worth pointing out is that both Ford and GM’s vehicle delivery numbers have been on a decline since fiscal 2017 as reflected in the decreasing plots in the chart.

In this aspect, GM’s vehicle sales have plummeted by nearly 80% since fiscal 2017 while Ford’s figures have declined at a considerably smaller rate of 40% during the same period.

Also, both companies’ vehicle deliveries have reached record lows as of fiscal 2021 3Q.

Total Revenues

Ford vs GM in total revenue

Ford vs GM in total revenue

* Total revenues data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

Total revenue includes sales from the automotive sector and also the revenue generated by the captive finance arm of both companies.

That said, Ford’s total revenue used to be much higher than that of General Motors.

However, we can see that GM’s total revenue has grown at a much higher growth rate in fiscal 2021.

As a result, GM’s total revenue has slightly surpassed that of Ford in fiscal Q2 2021 for the first time since fiscal 2017.

In fiscal 2021 3Q, both GM and Ford’s total revenues have clocked at almost the same levels, with Ford’s figure slightly higher at $135 billion compared to GM’s $131 billion.

Similarly, both companies’ revenue figures also have been slipping since fiscal 2017 and the decline seems to have only reversed in fiscal 2021.

Gross Profit Margin

Ford vs GM in gross profit margin

Ford vs GM in gross profit margin

* Gross profit margin data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Both GM and Ford’s gross margin consists of only the automotive sector.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

The gross profit margin for both automobile companies comes only from their respective automotive sector.

That said, GM’s gross profit margin has been much higher than that of Ford in the last 5 years despite having lower sales figures which we saw earlier.

Moreover, you may have noticed that the gap between GM and Ford’s gross margin actually has been widening steadily over the years and it was the biggest as of fiscal 2021.

In fiscal Q3 2021, GM’s gross margin reached as much as 12% while Ford’s gross margin came in at only 7% on a TTM basis, a much lower figure compared to that of GM.

From a comparison perspective, GM’s automotive sector operates at a much higher efficiency than Ford’s automotive segment because of the much higher automotive gross margin.

In short, GM’s automotive sector is much more profitable compared to Ford as reflected in the significantly higher gross margin.

Operating Profit Margin

Ford vs GM in operating profit margin

Ford vs GM in operating profit margin

* Operating profit margin data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

Operating profit margin takes into account costs of sales, research and development expenses and marketing as well as administrative costs.

Similarly, General Motors’ operating profit margin also has been much higher than that of Ford Motor in the last 5 years.

And the gap is growing and was the biggest as of fiscal 2021 as seen in the chart.

In fiscal Q3 2021, GM’s operating margin totaled 8% on a TTM basis while Ford was barely making any operating profit during the same period.

Moreover, GM’s operating profit margin has surged considerably in fiscal 2021 and the latest figure has even exceeded the results reported prior to the COVID age.

Again, GM’s operations run much more efficiently compared to Ford as seen in the much higher operating profit margin.

Therefore, GM’s core businesses make considerably more money than Ford does.

Net Profit Margin

Ford vs GM in net profit margin

Ford vs GM in net profit margin

* Net profit margin data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

The net profit margin takes into consideration all costs of doing business, including taxes and interest expenses.

According to the chart, GM’s net profit margin also has been considerably higher than that of Ford since fiscal 2018.

Ford used to have a much higher net margin at 5% but this figure has been on a decline and reached only 2% as of fiscal 3Q 2021 on a TTM basis.

In contrast, GM’s net profit margin rises considerably over the years and totaled more than 8% as of fiscal 3Q 2021.

Moreover, GM’s net margin grew particularly fast in fiscal 2021, illustrating the significant recovery of the company post-COVID period.

Despite the adverse impact of the COVID-19 pandemic in fiscal 2020, GM had been profitable throughout 2020 as reflected in the positive net profit margin.

On the other hand, Ford incurred losses in a number of quarters during the worst COVID-19 outbreak when its net profit margin dived to the negative area in the chart, indicating the weak earnings power of the company.

In short, GM has a much better earnings power than Ford does.

Adjusted EBIT Margin

Ford vs GM in adjusted EBIT margin

Ford vs GM in adjusted EBIT margin

* Adjusted EBIT margin data shown in the chart is presented on a TTM basis.
* Quarterly results are obtained directly from the respective company’s financial reports.
* Adjusted EBIT margin is calculated based on the ratio of TTM adjusted EBIT to TTM revenue.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

The adjusted EBIT or adjusted earnings before interest and taxes is a non-GAAP metric adjusted by the respective company.

In general, the adjusted EBIT is used by each company to exclude non-recurring, special and non-core related items.

Therefore, the adjusted EBIT focuses only on core sectors such as the automotive sector to provide investors with an overview of the strength of the company’s core businesses.

However, they may not be comparable on an apple-to-apple basis because each company has its own methods of adjustment.

While the methods of adjustment may differ for Ford and GM, the difference may not be significant as both of them operates in the same industry and therefore, what’s been adjusted should be nearly identical.

Other than the mentioned items, interest income and expense, as well as taxes, are also excluded in the adjusted EBIT.

That said, GM’s adjusted EBIT margin has been far superior to that of Ford since fiscal 2017 as seen in the chart above.

Over the last 5 years, GM’s adjusted EBIT margin has been about 3 to 4 percentage points higher than Ford’s figures consistently.

In fiscal Q3 2021, GM’s adjusted EBIT margin came in at about 12%, a much higher figure than Ford’s adjusted EBIT margin of only 8%.

In short, GM’s core performance has been far superior to that of Ford as reflected in the higher adjusted EBIT margin.

Operating Cash Flow Margin

Ford vs GM in operating cash flow margin

Ford vs GM in operating cash flow margin

* Operating cash flow margin data shown in the chart is presented on a TTM basis.
* Operating cash flow margin is calculated based on the ratio of TTM net cash from operating activities to TTM revenue.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

From the perspective of cash flow, Ford generates much better operating cash flow compared to General Motors as seen in the chart above.

However, Ford’s operating cash flow margin declined considerably in fiscal 2021.

As a result, Ford and GM’s operating cash flow margins were nearly the same in the latest quarter.

As of fiscal 3Q 2021, Ford’s operating cash flow margin came in at 12.5% compared to GM’s figure of 11.5% on a TTM basis.

Therefore, Ford’s operating cash flow margin was only slightly better than GM’s number.

Free Cash Flow Margin

Ford vs GM in free cash flow margin

Ford vs GM in free cash flow margin

* Free cash flow margin data shown in the chart is presented on a TTM basis.
* Free cash flow is the difference between net cash from operating activities and capital expenditures.
* Free cash flow margin is calculated based on the ratio of TTM free cash flow to TTM revenue.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

Similarly, both Ford and GM’s free cash flow margins also have been nearly at the same levels as seen in the chart above.

As of fiscal 3Q 2021, Ford’s figure totaled 8% while GM’s figure came to about 7%, only slightly behind that of Ford.

In short, both GM and Ford are having about the same efficiency in terms of free cash flow generation.

Net Debt Margin

Ford vs GM in net debt margin

Ford vs GM in net debt margin

* Net debt margin data shown in the chart is presented on a TTM basis.
* Net debt is calculated based on the companies’ respective automotive debt, unsecured debt and total cash on hand.
* Net debt margin is calculated based on the ratio of net debt to TTM revenue.
* Ford and GM’s fiscal year begins on Jan 1 and ends on Dec 31.

For the calculation of the net debt for Ford and GM, readers may visit this article – Ford’s net debt and GM’s net debt.

In general, Ford and GM’s net debt is calculated based on the respective automotive debt and unsecured debt net of the total cash position.

That said, according to the chart above, Ford’s net debt margin has been considerably higher than that of General Motors since fiscal 2017.

On average, Ford’s net debt margin totaled about 40% while GM clocked at around 30%.

As of fiscal Q3 2021, Ford’s net debt margin came in at 39% while GM’s ratio was about 34%, a much lower figure compared to Ford.

Therefore, Ford has a considerably higher debt level relative to revenue compared to GM.

Dividends

In terms of cash dividends, both Ford and GM were dividend-paying stocks.

However, both companies suspended their cash dividends in fiscal 2020 and only Ford has reinstated the quarterly dividends in 4Q 2021.

On the other hand, General Motors’ cash dividend suspension was still being enforced as of 4Q 2021.

Therefore, GM was still a non-dividend-paying stock as of Q4 2021.

For dividend investors, Ford’s stock would probably be a better pick considering the cash dividends, albeit at only 10 cents per share declared in 4Q 2021.

At this amount, Ford’s forward dividend yield comes to only about 1.6% based on an annual rate of $0.40 USD per share and a stock price of about $24.00 as of Jan 2022.

Despite the low yield, it’s a good start for Ford’s stock and it’s also way better than General Motors’ non-dividend policy.

However, I believe GM will also follow in Ford’s footsteps in no time given the company’s growing cash flow and the surging profitability as seen in prior charts in this article.

For now, only Ford’s stock pays a dividend.

Summary

To recap, Ford beats General Motors by a wide margin in terms of sales, be it vehicle deliveries or revenue.

But for revenue, GM’s total sales have closed the gap with Ford in fiscal 2021 and was at the same level as that of Ford as of fiscal 3Q 2021.

For profitability, we can see that GM has been leading the race and has been far superior to Ford’s stocks.

For example, several of GM’s margins such as the gross profit margin, operating margin, net margin and adjusted EBIT margin have been much higher than that of Ford.

Therefore, General Motors seems to be able to operate at a much better efficiency than Ford does.

From a cash flow perspective, both companies have been having about the same efficiency in operating and free cash flow generations but Ford’s results edged slightly higher in fiscal 2020.

While Ford’s stock may have been lagging in profitability and margins compared to General Motors, the company declared a cash dividend as of fiscal Q4 2021.

On the other hand, GM was still a non-dividend-paying stock as of 4Q 2021.

Moreover, Ford carried slightly higher net debt relative to revenue compared to GM as of fiscal Q3 2021, illustrating the higher risk associated with Ford’s stock.

In short, GM’s stock seems to be a better bet than Ford’s stock from the perspective of several margins and profitability metrics.

However, if your main purpose is on dividends, then Ford’s stock would probably be a better choice as it has already resumed the suspended cash dividends.

For General Motors, the company may resume the cash dividend soon given the improving cash flow and profitability.

References and Credits

1. All financial figures in this article are obtained and referenced from Ford and Tesla’s earnings reports which are available in:

i) Ford Earnings Releases, and
ii) GM Investor Relation.

2. Featured images in this article are used under free commercial license and no attributions are required – Pixabay.

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Disclosure

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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