Why Ford (F) Is Up Today

Tickers in this article: F

NEW YORK (TheStreet) -- Ford  was rising 1.13% to $16.59 on Wednesday after the automaker announced it had partnered with Stanford University and the Massachusetts Institute of Technology to begin research into automated driving technology.

The American carmaker will work with two of the top American universities to look into the "technical challenges" that come with autonomous vehicles, which use automated systems to control certain aspects of driving, according to Reuters.

Ford CEO Mark Fields made the announcement at the opening of the annual Washington Auto Show, at which Ford also showcased its automated Ford Fusion hybrid vehicle.

"In the long term, we see a future of connected cars that communicate with each other and with the world around them to improve safety, reduce traffic congestion and achieve major environmental benefits," Fields said. "It is likely to bring fully autonomous navigation and parking."

Fields went on to say that the research car, which has technology that uses sound waves (similar to a bat or dolphin) to detect moving objects such as other cars, human beings and animals, could operate on its own without a driver's supervision. 

TheStreet Ratings team rates Ford as a "buy" with a ratings score of B. TheStreet Ratings 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, increase in stock price during the past year, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par 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 13.7%. 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 where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • Net operating cash flow has increased to $3,840.00 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 29.24%.
  • 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 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($1.61 versus $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.