Morningstar

Ford: Sticking With Our Fair Value Estimate

The company declares special dividend and expects pretax profit for 2017 to decline, as a strong core auto business will not offset negative variances from Ford Motor Credit.

Securities In This Article
Ford Motor Co
(F)

At a Jan. 10 investor conference,

The other new item is a special dividend of $0.05 a share, while the regular dividend will be flat at $0.60 a year. The $200 million special dividend is much less than the $1 billion special dividend announced a year ago, but we are not surprised, as management has said for several months that the U.S. market has topped out. It is still a cyclical industry, and we think too much cash in a recession is never a bad thing. We wouldn’t mind seeing Ford buy back its shares beyond offsetting dilution, but that does not seem likely, as the shareholder base prefers a dividend. Management made clear in 2014 that special dividends would be somewhat frequent, as with truck maker Paccar.

The company also announced seven new electrified vehicles this month. Most are hybrids, including the first ever hybrid F-150 pickup and a Mustang hybrid with V-8 power, both due out in 2020, and an all-electric small SUV with at least 300 miles of range due by 2020. On Jan. 9, the company finally confirmed what many suspected with the Ranger midsize pickup coming back to the U.S. in 2019 and a new Bronco to combat Jeep in 2020, both made on the same platform.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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