I Believe This, Even Without Seeing The Numbers

The Ford F-150 Franchise Is Reportedly Worth More Than Ford Itself

1st Gear: The Ford F-150 Franchise Is Worth More Than Ford Itself, Analyst Says

Ford’s recent financial woes have been causing concern among investors, but in his report yesterday, Morgan Stanley analyst Adam Jonas cranked up The Blue Oval’s valuation for the first time in two years, in part, because of the strength of Ford’s mighty but undervalued F-150. Good news for Ford and its much-coveted standing with investors.

The Detroit News quotes the report, writing:

“We see Ford as an out-of-favor self-help story with room to surprise the market with cost-savings and profit-repositioning potential,” Jonas wrote. “At its current depressed valuation level, the value of its commercial franchise (F-Series) represents a larger percentage of its firm value than any other OEM under our global coverage.

The study itself, which you can read here, quantifies the F-150 franchise’s value, stating:

We [at Morgan Stanley] estimate the F150 franchise to be worth 135% of the market cap of Ford.

But of course, the F-150 isn’t the only reason why Jonas raised Ford’s earnings forecast by the largest amount in five years. Part of the move also has to do with CEO Jim Hackett’s restructuring efforts and cost cutting like FoMoCo’s planned $14 billion reduction in materials and engineering expenses, with the news site writing:

But certain moves like potentially restructuring segments of the company and redeploying funds could “halt years of underperformance,” he wrote. Ford has said it will move money around to shift the company’s focus away from car production and make more SUVs.

Jonas’s report says that Ford “isn’t out of the woods yet,” and recommends reducing nameplates and leaving “loss-making regions” as potential actions that could crank up the stock price.

(Jalopnik.com)