February 13, 2012 By M. Alden 7 Comments

Summary

Ford Motor Company is the American automaker that avoided bankruptcy during the financial collapse, and recently resumed a dividend.

-Seven Year Revenue and Income Growth: N/A

-Current Dividend Yield: 1.61%

-Balance Sheet Strength: Weak, but improving

Ford is not a dividend growth company; the dividend is small and newly reinstated, and the companys future faces difficulties. But the company is currently undergoing a transformation, and I believe the company could potentially make a good long-term value pick for investors with tolerance to risk.

This is an interesting company to analyze; Ive been interested in publishing an analysis on the value of Ford stock for a while and now that the Ford dividend has been reinstated, I have a small excuse to do so.

Overview

Ford Motor Company (NYSE: F) traces its history back to the beginning of the 20th century, when Henry Ford founded the company. The company mass produced the automobile, making it available to the general public. Workers were paid well enough to buy the cars they produced, and transportation across the United States and the world was transformed. Its now the fifth largest automaker in the world, behind Toyota, GM, Volkswagon, and Hyundai.

The company has been perpetually cyclical, with high operating costs, and so they have booms and busts of profitability. Ford and other American automakers began having large business problems over the last couple of decades, and things collapsed in 2008 as part of the financial crisis.

Of the Big Three, General Motors and Chrysler accepted tens of billions of dollars in government bailout money, and also went bankrupt to reorganize. Ford, headed by current Chairman William Ford, did not receive this money, nor did they go bankrupt. Instead, they survived via a large line of credit that they took out before the collapse, and continued operating.

Its worth noting, however, that Ford was in favor of bailouts. When things were less certain, they were prepared to receive government help. In addition, they supported bailouts of their competitors, due to the fear that if one or both of them collapsed, there would potentially be a systemic collapse of their suppliers, which also supply Ford with parts. Plus, Ford did receive a loan from the Department of Energy to invest in more fuel efficient cars, and they desired a $9 billion line of credit to fall back on from Congress in case things worsened, and they also benefited from the Cash for Clunkers government program, as well as a program that provided liquidity for companies when credit markets dried up during the recession. Still, Ford was able to avoid direct necessary bailouts and bankruptcy, and has emerged as a profitable company once again.

Sales and Profit Description

In 2010, Ford sold around 5.3 million vehicles. 2.413 million were to North America, 1.573 million were to Europe, 838 thousand were to Asia/Pacific, and 489 thousand to were to South America.

Around 92% of total revenues were from the automotive operations, while the remaining 8% were from financial services. But in terms of profit, 58% of profits were from the automotive operations and a substantial 42% were from financial services. Fords financial services help finance their vehicles to consumers via vehicle loans. So when they sell a vehicle, they generally receive the profit from the vehicle itself as well as interest profits from a loan.

Revenue, Earnings, Cash Flow, and Margins

Ford has had declining revenue and profit losses, followed by a rebound.