Ford (F) said on Wednesday that consumer demand for its new cars remains “very robust,” while acknowledging that supply chain disruptions from lockdowns in China and rising raw material costs remain challenges. major challenges. The automaker has taken orders for more than 300,000 vehicles in its lineup, Ford Chief Financial Officer John Lawler told analysts at an auto industry conference hosted by Deutsche Bank. But the company has been unable to meet this strong demand due to the continued shortage of semiconductor chips. Lawler also explained that Ford raised the prices of most vehicles as much as possible in the short term to offset inflation. One area that has room for further price increases is its electric vehicles, Lawler said, but additional management would be very cautious and consider competitor pricing (the biggest factor) and what the consumer can afford (the second). most important factor). Another potential concern is Ford’s credit business, which is beginning to see an increase in delinquencies. Lawler’s view is that the increase is more of a reversion to the mean after a period of very low delinquencies from 2021. Still, this is something we will need to watch closely. This could very well be a leading indicator of the demand destruction that the Federal Reserve is actively trying to induce in order to contain inflation. There has been no change in management’s forecast and the company continues to target an adjusted EBIT margin of 8-10% by 2026. Regarding the possibility of a recession, Lawler pointed out that Ford is a company different today than in previous recessions. In the past, Ford would have a full inventory and need to offer high incentives to move these cars. Supply chain bottlenecks have forced Ford to stay very lean on inventory, and with this large number of orders, it won’t need to cut prices. The Bottom Line: Lawler’s comments give us confidence that management is navigating a challenging environment and maintaining our long-term belief in the business. At 6.3 times FY2022 earnings and 5.7 times 2023 estimates, the risk of increased defaults and recession is largely priced in. This is especially true given that Ford’s inventory position is headed for a likely downturn; the stock also pays a dividend yield of 3.3%. With all this, we maintain our rating 2 on Ford. A stock rated “2” means we would wait for a pullback before buying it. We see no urgency to add to our position at this time given the current economic environment. (Jim Cramer’s Charitable Trust is long F. See here for a full list of stocks.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust. wallet. If Jim talked about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO TRUSTEE OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY RESULT OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Ford Chief Financial Officer (CFO) John Lawler and Linda Zhang, chief engineer of the company’s F-150 Lightning All Electric, participate in the opening bell ceremony at the New York Stock Exchange (NYSE) in New York, New York, USA, 28 April 2022.
Brendan Mcdermid | Reuters
Ford (F) said on Wednesday that consumer demand for its new cars remains “very robust,” while acknowledging that supply chain disruptions from lockdowns in China and rising raw material costs remain challenges. major challenges.
