Near a 52-Week High, Ford Motor Company (F) Is Still a Buy

Cash flow
One problem with Ford has been a decline in free cash flow over the last three years. While Ford spent billions in capital expenditures its free cash flow declined from $7.3 billion in 2010 to $5.4 billion in 2011, and slid down to $3.5 billion last year. This is one reason why Ford’s second-quarter report was so great: Its operating related cash flow for the first half of 2013 came in at $4 billion, more than double last year’s result. Its gross cash has also been trending upwards recently as well.

Graph by author, information via Ford SEC filings.

For investors this is a great development because it means Ford has plenty of capital to pay down its debt, fund its pension, and continue developing a strong lineup of vehicles – redesigns of the Mustang and F-150 are due out next year. It also means that Ford has plenty of cash available to continue its plan to expand and catch up in China, where it’s introducing 15 models by 2015 to double its market share to 6%. Even better for investors, it means there is cash available for share buybacks – to reverse previous share dilution – and possibly even an increased dividend.

It’s easy to see where Ford is going as an investment. It’s improving its financials, and planning sustainable and very profitable growth – and I’ll stay along for the ride.

The article Near a 52-Week High, Ford Is Still a Buy originally appeared on Fool.com and is written by Daniel Miller.

Fool contributor Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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