Ford Motor Company (F): Growing Domestic Sales Faster

Fundamentals

Ford Motor Company (NYSE:F) trades for just 9.5 times trailing earnings and 8.44 times forward earnings. Comparatively, the automaker industry trades for a trailing PE of 19.5 and a forward PE of 14.7. The company also pays nearly twice the dividend of its peers, yielding 2.8%.

Certainly, trailing earnings numbers are helped by the significant tax breaks U.S. car companies received last year. Ford is still priced lower on a trailing PE basis, however, than its Detroit counterpart General Motors Company (NYSE:GM), which trades at a PE of 11.

The company’s balance sheet is loaded with debt. Its debt-to-equity ratio hovers close to 6. But this metric is mostly due to its financial services arm, which is actually quite profitable. Only about $16 billion of the company’s debt goes toward financing operations. Adjusted for that figure, the company’s debt-equity ratio falls below 1.

In fact, the company has taken steps to reduce debt levels significantly in the past three years while improving its credit rating by keeping plenty of cash on the balance sheet. Its quick and current ratios are 2.5 and 2.8 respectively. While investors ought to pay attention to debt levels, Ford Motor Company (NYSE:F) current position is not something to deter potential investments.

The bottom line

The future looks bright for Ford Motor Company (NYSE:F) as sales and market share rise in the U.S. and China. Fundamentally, the stock is still inexpensive, and I believe analysts are underestimating Ford’s profits just as they’ve done every quarter for the past year. Eventually, the market will shift gears, and send the stock price driving higher.

The article Getting in Gear With Ford originally appeared on Fool.com.

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