Three Buy-Rated Automakers For 2014

Tickers in this article: F GM TM

NEW YORK (TheStreet) -- TheStreet reiterates its buy ratings for Ford Motor Co , Toyota Motor Corp  and General Motors ahead of 2014.

Year to date, Ford climbed 28.1%, Toyota added 27.9%, and General Motors soared 38.9%.

By Friday's market close, Ford had added 1.2% to $16.59, Toyota was off 0.93% to $119.22, and General Motors ended the session flat at $40.04.

TheStreet Ratings team rates Ford Motor Co as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate Ford Motor Co (F) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had subpar growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, F's share price has jumped by 48.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, F should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $3,840 million or 12.05% when compared to the same quarter last year. Despite an increase in cash flow, Ford Motor Co's cash flow growth rate is still lower than the industry average growth rate of 31.30%.
  • Ford Motor Co's earnings per share declined by 24.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, Ford Motor Co reported lower earnings of $1.42 a share vs. $5.01 a share in the prior year. This year, the market expects an improvement in earnings ($1.67 vs. $1.42).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, Ford Motor Co's return on equity significantly exceeds that of both the industry average and the S&P 500.