Will Ford Reach $100? Ford Stock Forecast Today
Will Ford reach $100? This target seems more impossible if we consider the fact that Ford has given only 12% returns in the last five years and is down by 28% in the last year. So, what are the factors that can take Ford to $100?
Ford has been one of the oldest automakers but is still a pillar of innovation in the auto industry. The current share price is $14.03 (as of 27.11.2022) and $100 seems to be a mammoth target for the stock as it represents an absolute gain of 612% over time.
Catalysts for Ford to Reach $100
- Fast transition to Electric Vehicles – Ford is dealing in the both combustion engines and electric vehicles. But it is the pace of transition to EVs that differentiate Ford. The company plans to reach an EV capacity of 600,000 by 2023 and 2 million units by 2026. Ford plans to spend $50 billion till 2026 to grow the EV electric vehicle division called Model e. So, Ford is moving in leaps and bounds toward EVs and it is an important catalyst for its stock to reach $100.
- Biggest Strength of Ford – The biggest strength lies in the fact that Ford can fund the transition to EV with its positive cash flow from conventional models. The company has achieved the target of $6 billion for free cash flow for 2022 in just three quarters and has raised the target for the complete year to more than $10 billion. The company is cutting costs by cutting manpower in the conventional auto segment. This cash flow smoothens the process of transition to EVs without much drop in earnings per share for any quarter.
Will Ford Reach $100? Financials Required to Reach $100
The above discussion is more theoretical, let us turn it into some practical points. The basic formula for the stock price is EPS*P/E (Earnings per share/Price per earnings). The current price for Ford can be broken into 2.26(EPS)*6.37 (P/E) = $14.39. To reach $100, the components of the above multiple must increase to result in $100.
The forecast for earnings per share is given below: –
The EPS is projected to grow from 1.59 in 2021 to 1.87 in 2025. It turns out to be a CAGR of 4%. Considering the growth in the last year and the effect of catalysts discussed above, it is modest to assume a CAGR of 10%. Hence, EPS will be $2.32 by 2025 and $4.12 by 2031.
The current P/E ratio for the stock is 6.37 and it is hovering around the same level for the last so many years except 2019. But, the P/E of other EV manufacturers like Tesla is 98 and the auto sector as a whole carries a P/E of 25. Because Ford is transiting quickly into EVs, it will not be a bad assumption for Ford to have a P/E of 25 by 2031.
Hence, multiplying $4.12*25= $103. It looks plausible that Ford will reach $100 by 2031.
Also Read: Ford Stock Forecast 2023
Will Ford Reach $100: Conclusion
It is not a question of if, but a question of when will Ford stock reach $100. It is a fact that Ford stock has underperformed the S&P 500 index for most years in the last two decades and it is nowhere near Tesla in terms of EVs delivery, but it is firing all cylinders to catch the EV train. F-150 lightning trucks are the most sold truck in the United States and Ford is providing cushion to its EV business with conventional vehicle profits.
The biggest disadvantage of Ford is its non-dominance in any particular segment or particular geographical area. Unless Ford does not dominate or does not take a major chunk of the market share of EVs, it will be impossible for its stock to reach $100, be it by 2031 or even 2040.
Ford Stock Forecast Today
|1. Market's Wisdom||N/A|
|1a. Market Data||N/A|
|1b. Technical Recommendation||Sell|
|2. Crowd's Wisdom||Partially Bearish|
|2a. Social Media Buzz||Lower|
|2b. Social Media Sentiment||Neutral|
Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Index or Individual Coins. Please consult a registered investment advisor to guide you on your financial decisions.