Ford back on Track
Ford Motor (F) continues to rebuild from the ashes of 2008 as the only American automaker to not take a bailout.
Ford (F) shares have backed down from its $13 share price seen in the beginning of the year. Since February Ford shares have fallen 28% and Friday finished at $9.34. That puts its annual dividend yield at 2% and its price-to-earnings ratio at an incredibly cheap value of 2. However there's a reason Ford shares are in the $9 range. In July the company revealed its full-year loss in Europe to exceed $1 billion. Ford is hurting in Europe and with a Q2 pretax loss of $404 million but there could be hope on the horizon.
Last week Ford (F) reported its Focus compact model should keep selling and finish the year as the "world's best-selling car". For the first six months of the year over 489K units of the Focus were sold compared to 462K Toyota Corollas, led by strong demand in Asia.
The average analyst target price for Ford is $14, which indicates an upside of more than 40% within 12 months. That's a big increase in a short amount of time and a more realistic profit could be half of that gain. Sales need to improve in Europe, not just the U.S. for Ford shares to move past the $10 mark.
Bottom line: Investors in Ford need to have patience but the long term focus could put money back in shareholders pockets via dividends and increased share price.
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