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Ford Motor Co. 3

  1. 1. Last Updated: 1-15-08 Copyright 2004, 2005, 2006, 2007, 2008 by Richard Sias NOTE: YOU MUST E-MAIL THIS ENTIRE REPORT TO Heather Knewtson BY 5:00 ON THE MONDAY PRIOR TO YOUR PRESENTATION (for Monday meetings the reports are due by 5:00 on Saturday). Reports not turned in by 5:00 will receive a 10 points/day penalty. PLAGIARISM PLAGIARISM IS CHEATING. The APA Manual (Publication Manual of the American Psychological Association. Washington DC: American Psychological Association. 1995. 292-95) suggests the following principle to avoid plagiarism: Quotation marks should be used to indicate the exact words of another. Summarizing a passage or rearranging the order of a sentence and changing some of the words is paraphrasing. Each time a source is paraphrased, a credit for the source needs to be included in the text. ANYONE ENGAGING IN PLAGIARISM WILL RECEIVE AN "F" IN THE COURSE. Notes for getting a good grade on your stock report: Your grade is based on the quality of your analysis and writing. Even if nothing is ‘wrong,’ it doesn’t mean you will get a perfect grade. • I have access to brokerage reports. If you email your stock choice, I will send you three or four current brokerage reports on the stocks. Presentation 1. The presentation is 15% of the report grade! Spend some time practicing before you present – know the key points you want to make. 2. Start by telling us what the company does. Make sure you understand how they make money (what do they sell?). In some cases, a company may have a number of divisions and both US and international sales. Focus on the most important divisions. 3. Tell us about the company’s competition and how they differ from their competitors. 4. Tell us why you recommend we buy (or recommend we don’t buy) the security. This section is your investment thesis. 5. If you do not know the answer to a question, it is ok to say so. 6. Do not “read” your report to the class. Although you might need to glance down to follow your notes, look up when talking to the class. Writing – Most important – Figure out your point – Have a plan! 1. Figure out what you want to say. Your competition and strategy section should cover three or four main ideas. 2. Each paragraph should cover ONE idea. Have a topic sentence (introducing the idea), three or four supporting sentences and a concluding sentence. 3. Paragraphs should be arranged so that each follows from the previous. Do not, for example, discuss competition, then your company’s historical dividend, then back to competition. 4. If you do not understand something, do not put it in your report. Do not guess. You need to understand what you put in the report. If, for example, you discuss a new product the company is developing, you need to understand the basics of the product.
  2. 2. Cougfund Stock Report Grading Key Points Possible Points Oral Presentation 10 Investment Thesis 15 Rest of front page 5 Company Summary/Competition and Strategy 25 Fundamental Valuation 5 Relative Valuation 10 Technical Analysis 10 Earnings Analysis 5 Analyst Recommendations 5 Institutional Ownership 5 Piotroski Analysis 5 Total 100 I. Grammar/Writing Style/Organization – 1. Use commas in #s larger than 999, i.e., 1,000 not 1000 (make it easy for the reader). 2. Do not use contractions (don’t, can’t, etc). 3. Un-highlight all yellow cells in your table. 4. When referring to a date, put the month, date and year (March 1, 2003). Don’t just say, “On Monday…” or “On July 1st…” 5. Be consistent in your writing and formatting. 6. Have someone proofread your paper for sentence structure, comma usage, and typos. The WSU Writing Lab in located on the main floor of the CUE building (Room 303). 7. Do not use informal words, phrases, or clichés. 8. Use complete sentences. 9. Each paragraph should be one idea. See suggestions in instructions. 10. Do not use abbreviations in your report such as Corp., Feb., or Co. 11. Choose whether you are going to refer to a company using its name or ticker and be consistent throughout your report. Don’t use “Inc.” or “Corp,” e.g., just say “Amgen increased…” not “Amgen Inc. increased” 12. In America, a period goes inside the quotation mark (e.g., …Moody’s upgraded the company’s debt from “stable” to “positive.” (not, “positive”.) (In England, the period goes outside the quotation mark.) 13. It’s usually better to put “however” in the middle of a sentence rather than the beginning. For example, from Kurt Vonnegut, “The chief weapon of sea pirates, however, was their capacity to astonish.” (Technically, it’s not wrong to start a sentence with however – as long as it’s followed by a comma.) 14. Don’t use acronyms that your reader won’t understand. 15. Use $ signs on $ values (e.g., prices, EPS). Also, in writing use, “$30 billion,” rather than “30 billion dollars.” 16. Underreacted and overreacted are one word. 17. Analyst’s refers to one analyst. Analysts’ refers to the group of analysts. 18. You can almost always eliminate the words “in order.” 19. SNW – Sentence Needs Work. This sentence does not make sense (grammatically) or could be better structured. Read it aloud to yourself. 20. UGF – Use Garamond Font throughout your report. 21. Numbers: Spell out numbers less than 10. If you start a sentence with a number, you have to spell it out, i.e., don’t say “59% of IBM’s revenue…” say, “Fifty-nine percent of IBM’s revenue…”
  3. 3. II. Oral presentation – 1. Tell us how the company makes $. 2. Tell us what are the company’s competitive advantages/disadvantages? Who are the competitors and how do they differ? 3. Tell why you make the recommendation you do. 4. Do not “read” your notes. 5. Dress is business casual. 6. Make slides attractive – don’t put too many words on one slide. 7. Really FOCUS on what you think is important. III. Investment thesis 1. OV/UV. The goal of the investment thesis is to tell us why you make the recommendation you do. Make sure you indicate whether the item suggests the stock is overvalued (OV) or undervalued (UV). 2. IME. You need to Incorporate Market Expectations. For example, assume that GM’s settlement of a labor dispute is good news for the company. If the market overreacted to this news, then it suggests the stock is overvalued. If the market underreacted (i.e., fail to fully incorporate), then it suggests the stock is undervalued. IV. Company Summary/Competition and Strategy 1. Explain how the company makes $. Why is their primary business? 2. Who are their competitors and how do they differ from their competitors? You need to make this clear. Describing each company is an insufficient comparison. 3. Be sure that the strategies (and differences from competitors) are meaningful and not just platitudes. 4. In most cases, we don’t really care much about the company’s history, e.g., its founder’s name, where it is incorporated. We are interested in trying to find out about what they do and what are their competitive advantages. Think about “moats” and how those moats are changing. Seeking alpha is a good source of investor discussions about the company. V. Fundamental Valuation 1. Make sure you say what industry you use. 2. Use complete sentences. VI. Relative Valuation 1. Make sure you discuss all the possible alternatives (for example, a high P/E could mean the stock is overvalued or less risky or faster growing). 2. A negative denominator means the number is meaningless. As the denominator approaches zero, the ratio approaches infinity. VII. Technical Analysis 1. Use complete sentences to describe results. 2. Make sure # are reasonable. If the price is only $1 above the moving average, that is probably pretty neutral. 3. For linear regression, a price above the line is bearish (as price is forecasted to return to the trend). VIII. Analyst Recommendations 1. Use complete sentences to describe results. IX. Institutional Ownership 1. Have some discussion of both changes in fractional ownership (e.g., a decline of 5% of institutional shares means that 5% of the company’s outstanding shares moved from institutional investors to individual investors) and whether more institutions were buying or selling. 2. Use complete sentences. X. Piotroski Analysis Include a very short discussion of analysis.
  4. 4. Ford Motor Company (F) Jeff Vetter Date: April 16th 2008 Consensus Estimate 12/07A 12/08E 12/08E Sector: Consumer Goods EPS -0.23 -0.37 0.61 Industry: Auto Manufacturer P/E N/A N/A N/A Current Price: $7.45 Long Term Growth Rate: 7.83% 52 Wk Price Range: $4.95-$9.70 Ratio Analysis Co. Indus. Sector SP500 Ave. Daily Vol: 15.11 Million P/E (TTM) N/A 18.61 18.06 19.13 Beta: 1.89 P/S (TTM) 0.09 0.54 1.20 2.57 Market Cap ($million): 16,390 P/B (MRQ) 2.83 3.15 3.22 3.85 Shares Out (million): 2,200 ROA (TTM) -0.88 -2.24 5.93 12.70 Inst. Hold %: 75.70 EBO Valuation $0.28 Div Yld: 0% Recommendation: BUY Total Debt/Equity: 29.94 Stop-loss Price: $6.30 Member S&P 500? Yes Price 6-mo prob 12-mo prob Target Price $9.10 50% 62% Investment Thesis Summary • With the company restructuring plan Fundamental Valuation: almost complete, the company is Bearish- Using a discount rate of 14.06%, the forecasted to have positive EPS numbers in EBO valuation indicates a share price of $0.28, a 2009, the first time since 2005. The decrease of 96%. market will react in a favor of Ford as the Relative Valuation: automotive industry has had difficulties Bullish- There were 4 of 5 categories that posting positive EPS over the past few indicated bullish signs. When compared to its years. competitors, Ford looks to be either overvalued of a riskier investment choice. • In three years, Ford has cut nearly $5 billion Technical Analysis: in costs, thus resulting in increased margins. This indicates that the value of the stock Bullish- Five out of the six indicators were bullish with only the Stochastics being neutral. may be undervalued and should increase. Earnings Analysis: • 2007 North America sales were down from Bullish- Ford has experienced four straight the previous year. The market may have positive earnings surprises. Compared to its overreacted to this considering international competitor General Motors, Ford has shown sales were up enough to offset the steady positive surprises when General Motors difference. has only reported one positive surprise in the last • Ford has began to concentrate on the four quarters. production of hybrid vehicles and continues Analyst Recommendations: to produce the best selling hybrid SUV’s. Neutral/Bullish- Ford’s rating has stayed However, the market has already steady at 3.15 over the past two months and had incorporated this into the current stock decreased from 3.38 one year ago. The majority price. of analysts recommend a hold. • Ford has also taken a strong stance on Institutional Ownership: cleaning up their carbon footprint that is Bullish- Institutional ownership has increased created due to the manufacturing process. 0.83% with there being 26 more buyers than This shows a strong corporate social sellers. responsibility, something that more people Piotroski Analysis: are becoming aware of. This positive image Neutral- Ford has a Piotroski score of six and a can only increase the value of a company in P/B value of 2.83 which places it in the second consumers’ eyes. quartile indicating a value stock. 1
  5. 5. Company Summary The Ford Motor Company was founded in 1903 and over the past 105 years has become one of the most recognizable automotive makers in the world. In 2007 Ford was the third largest automaker based on worldwide vehicle sales as well as being third in sales in the United States.1 Ford was also the overall seventh- ranked American-based company in the 2007 Fortune 500 list, based on global revenues in 2006 of $160.1 billion. In 2007 Ford and its subsidiary, Jaguar Cars Limited, completed the sale of its interest in the high end Aston Martin automobiles. The company is divided into two separate segments, Automotive and Financial Services. Between these two segments, Ford currently employs over 246,000 employees throughout the world.2 The automotive segment is responsible for the manufacturing and distribution of vehicles under Ford, Lincoln, Mercury, Volvo, Jaguar, and Land Rover brand names. All of Ford's cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America.3 This segment is also responsible for selling cars and trucks to dealers for sale to fleet customers such as rental companies. In addition to producing and selling cars and trucks, Ford also provides retail customers with a variety of services and products through its dealer network, mainly in the areas of maintenance, repair and vehicle service warranties. In 2007, Ford sold 6,553,000 vehicles worldwide.4 In addition to North American sales, Ford has divided the company into global sectors. These include, Ford South America, Ford Europe, and Ford Asia Pacific/Africa. Ford also currently owns 33.4% of Japanese automaker Mazda.5 Band Number of Dealerships as of 12/31/2007 Ford 10,963 Mercury 1,916 Lincoln 1,466 Volvo 2,369 Land Rover 1,397 Jaguar 859 Table 16 Figure 17 1 2 3 4 5 6 10-k report 7 10-k report 2
  6. 6. In addition to the automotive segment, Ford has created Ford Motor Credit Company. This segment offers various automotive financing products through automotive dealers. The biggest part of the Ford Credit business consists of helping to finance the company’s vehicles while also supporting its individual dealers. The financial segment is divided into three categories, retail financing, wholesale financing, and other financing.8 Retail financing involves purchasing retail installment sales contracts and retail lease contracts from dealers, and offering financing to commercial customers, primarily vehicle leasing companies and fleet purchasers, to purchase or lease vehicle fleets. Wholesale financing involves making loans to dealers to finance the purchase of vehicle inventory. Finally, other financing includes making loans to dealers for working capital, improvements to dealership facilities, and the acquisition and refinancing of dealership real estate.9 Table 210 Strategy The worldwide automotive industry, Ford included, is greatly affected by general economic conditions in which companies have very little control over. This industry consists of many different producers with no single company dominating a single market. The Ford Motor Company continues to make positive strides in the automotive production industry as the industry continues to experience a very competitive pricing environment. Ford recently fell to the world’s third largest automotive manufacturer behind only General Motors and Toyota. Recent struggles of the company can be attributed to the restructuring of the company that slowly started in 2005. In an aggressive effort to increase their margins across the board, Ford has taken drastic measures to cut costs over the past few years. The company is currently on track to have total cost reductions of $5 billion by the end of 2008 compared with 2005.11 In addition to the reduction of costs, Ford has also taken a strong stance on cleaning up their carbon footprint that is created due to the manufacturing process. Since the year 2000, Ford has cut global energy use by 27% and water use by more than 25%.12 The recent loss of market share can be attributed to the shift in the industry away from the traditional strengths of Ford such as traditional SUV’s and full-size pickups. In order to counteract this shift, Ford prides itself in its dedication to innovation. In 2007, a record $7.2 billion was spent on engineering, research and development. Examples of Ford’s innovation can be seen as there are nearly 47,000 Ford Escape and Mercury Mariner Hybrid vehicles on the road today. Another advantage that Ford has over their competition is their ability to set up partnerships with companies such as Microsoft to create a product that sets their vehicles apart from the rest. This can be seen in the new Microsoft Sync option that can be found in numerous vehicle models. In addition to their partnerships, Ford recently completed a historic four-year labor agreement with the United Auto Workers’ Union (UAW).13 This agreement is more than double the length than any of its competitors and ensures that they will be able to stay on tract and achieve their 2008 goals of accelerating the development of new products as well as maximizing assembly line productivity. Competition Ford’s largest competitors include General Motors, Toyota Motors Corporation, Honda Motor Company, and Daimler AG. General Motors is the world’s largest automaker and has been the global sales leader for the past 76 years. The company operates under the brands of Buick, Cadillac, Chevrolet, GMC, 8 9 10 10-k report 11 12 13 3
  7. 7. GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, and Vauxhall.14 Similar to Ford, General Motors is segmented into two main divisions, automotive manufacturing and a financial service provider. The Company's total worldwide car and truck sales totaled 9.4 million for 2007. Substantially all of its cars, trucks and parts are marketed through retail dealers in North America, and through distributors and dealers outside of North America, the majority of which are independently owned. In addition to the products, the Company sells to its dealers for consumer retail sales; it also sells cars and trucks to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies and governments.15 General Motor’s market capitalization is currently $11.39 billion with reported $181.13 billion in revenue compared to Ford’s market capitalization of $16.44 billion and $172.46 billion in revenue.16 Another main competitor Ford faces is Toyota. In 2007, Toyota surpassed Ford as the world’s 2nd largest automotive manufacturer continue to ride their success in the U.S. market with sales totaling 2,620,825 in 2007 that helped lead to a market capitalization of $160.95 billion.17 Like both Ford and General Motors, Toyota is conducts the majority of their business in the automotive industry as well as financial services that they provide for their automobiles. The key factor that has helped Toyota grasp as much of the market as they have is their development of intelligent transportation systems for their vehicles as they are sold in over 170 countries worldwide.18 Along with General Motors and Toyota, Ford actively competes with Honda. Honda is a Japan based automotive manufacturer that specializes in the production of both four wheel and two wheel vehicles. Along with the manufacturing of vehicles, Honda provides financing similar to the other companies mentioned above.19 Total sale figures for 2007 included over 3.6 million automobiles sold (1.6 million in the United States) as well as over 10 million motorcycles were sold. The current market capitalization figure for Honda is $55.16 billion.20 Historical Revenue and Earnings: Historical Revenue Historical Earnings FY 12/07 FY 12/06 FY 12/05 FY 12/07 FY 12/06 FY 12/05 1st Quarter $43,019 $40,789 $44,895 $-0.15 $-0.76 $0.48 2nd Quarter 44,242 41,878 45,166 0.40 -0.17 0.66 3rd Quarter 41,078 37,095 40,510 -0.19 -2.79 -0.31 4th Quarter 44,116 40,303 176,896 -1.32 -2.97 0.78 Total $172,455 $160,065 $307,467 $-1.36 $-6.69 $1.61 Table 321 Ford has seen steady revenue growth over the past two years since posting very successful numbers in 2005. From FYE 2006 to FYE 2007 revenue has increased by 7.7%. During the same time there was an increase in EPS from $-6.69 to $-1.36, an increase of nearly 80%. The reason for the recent success and turnaround of the company compared to 2006 is direct results of a major restructuring program. Historically the second quarter has been the strongest in regards to both revenue and EPS. 14 15 16 17 18 19 20 21 4
  8. 8. I. Fundamental Valuation Table 4 Inputs: 1. EPS Forecasts and long-term growth rate were gathered at 2. Book value per share derived from balance sheet at 3. Discount rate: The current risk free rate is 4.37% which is the current 20-year Treasury Bond. Ford has a current beta of 1.89, and the expected return on the market is assumed at 9.5%. Using the CAPM formula (r=rf+β(E(rm)-rf)), [14.06=0.0437+1.89(0.095-0.0437)] a discount rate of 14.06% is derived. 4. Dividend payout ratio is 0% according to 5. Next fiscal year-end is December 31, 2008. 6. Current fiscal month is 4. 7. Target ROE= is 1.71 which is the five year industry average for the Auto Manufacturing industry according to Output and Sensitivity Analysis: 1. Based on these parameters, a 12 year forecasting horizon and a 7 year growth period, the EBO valuation is $0.28. 2. Changing the discount rate to 1.76% yields an EBO valuation .of $7.45 which is the current price. This new discount rate was derived through the CAPM equation. The suggested historical rate for the EBO valuation was between 9-10% however, to get the EB) valuation to the current price, a historical rate of 2.98% is needed. 3. Changing the growth rate to 15% would result in an EBO valuation of $0.34, a 25% increase. If the growth rate is changed to 3% the results would be an EBO valuation of $0.24, a decrease of 14.3%. Changing the growth rate results in moderate sensitivity (about 3.5% for every one point (13.4%) adjusted to the growth rate). 4. Changing the industry ROE to 5% from 1.71% (192% increase) would result in an EBO value of $0.86 (a 207% increase). By decreasing the ROE to 0.71% (59% decrease) would result in an EBO value of $0.11 (a 60.7% decrease). It is fair to say that Ford’s EBO valuation had very little sensitivity to changes in the ROE. 5
  9. 9. II. Relative Valuation Table 522 Indicator Interpretation P/E Bearish- Ford has the highest P/E ratio of all its competitors. This may indicate that the company is overvalued and less risky than its competitors. PEG (P/E/G) Neutral/Bullish- With a PEG ratio of 156, Ford had the 2nd lowest PEG ratio of its competitors, this suggests that Whirlpool is undervalued compared to its counterparts. This also suggests the low P/E ratio is not driven by lower growth P/B Bullish- Compared to its competitors Ford has the highest Price/Book ratio. A high P/B ratio implies a stock may be overvalued, less risky, or provide a higher ROE than competitors. Value (P/B/ROE) Neutral/Bullish - Ford has a negative value ratio that is lower than all four of the competitors. A lower value ratio implies that the stock may be undervalued or higher risk. The value ratio is determined using ROE, and is negative due to the negative ROE. P/S Bullish -The P/S ratio is lower than three of the competitors. The low P/S ratio is an indication that the stock may be undervalued. A low P/S ratio may also be an indication that the stock has a low profit margin or higher risk. Summary The overall indication from the relative valuation was bullish. When compared to its competitors, Ford looks to be either overvalued or a riskier investment choice. I believe the stock is fairly similar to its competitors in regards to this evaluation. I also believe that this evaluation of the stock is not all that accurate of an assessment as this stock does not seem to be overvalued or a riskier investment choice. 22 6
  10. 10. III. Technical Analysis Chart 1: Bollinger Bands Slow Stochastics Figure 223 Figure 324 Chart 2: Exponential Moving Average (EMA) MACD Figure 425 23 24 25 7
  11. 11. Figure 526 Chart 3: Linear Regression Momentum Figure 627 Figure 728 Briefly discuss each indicator in the following table. Indicator Interpretation Bollinger Bands Bullish- The current price is above the 50-day moving average, and at the upper limit. The bands have been widening due to recent price volatility. The price at the upper band indicating that it is poised to move in the near future, because other technical indicators are generally bullish, this is a bullish signal. Stochastics Neutral-%K is great than the %D while the gap is maintaining a steady distance, a bullish sign. However, %K is greater than 80% which could mean that Ford is overbought/overvalued, a bullish sign. Moving Averages Bullish- The current price is trading well above both the short and long-term moving averages indicating a bullish stock. The 25-day and 50-day moving averages both show upward momentum, which is a bullish indicator. MACD Bullish- The MACD line is above zero which is a bullish indicator. As well, the MACD line is slightly above the signal line, another bullish indicator. Regression Bearish- the downward sloping regression line is a bearish signal. Another bearish sign is the current price being above the regression line as the current price will tend to fall back down to the trend line. PriceROC Bullish- The momentum chart shows the stock to be slightly above 100, a bullish indicator. The stock also appears to be experiencing an increase in momentum, another bullish indicator. 26 27 28 8
  12. 12. IV. Earnings Analysis Earnings Surprises 12/2007 09/2007 06/2007 03/2007 12/2006 (Last qtr) (2 qtrs prior) (3 qtrs prior) (4 qtrs prior) (5 qtrs prior) Estimate -0.23 -0.46 -0.35 -0.58 -0.93 Actual -0.20 -0.01 0.13 -0.09 -1.10 Difference 0.03 0.45 0.48 0.49 -0.17 Mean Earnings Estimates 03/2008 06/2008 12/2008 12/2009 LT Growth Rate Earnings -0.15 -0.09 -0.37 0.61 7.83% # Estimates 12 11 11 10 3 Earnings Per Share Estimates Revisions Summary Last Week Last 4 Weeks Revised Up Revised Down Revised Up Revised Down Quarter ending 03/2008 0 2 2 3 Quarter ending 06/2008 0 3 0 3 Year ending 12/2008 0 3 1 5 Year ending 12/2009 1 2 1 4 Table 629 Ford has experienced four positive earnings surprises in the past four quarters. In the latest quarter (historically the worst), Ford only announced an earnings surprise of $0.03. However, the stock is currently following a positive trend and is predicted to report positive earnings by 2009. Ford is due to release their earnings for the first quarter in 2008, which will most likely follow the current trend and be a positive earnings surprise. While there has been some negativity on behalf of the earnings revisions within the last week, there has been numerous positive revenue revisions.30 Compared to its closest competitor General Motors, Ford has posted much better earnings during this difficult time as oil reaches new highs on a daily basis. General Motors has only posted one positive earnings surprise in the past five quarters. During the last two quarters General Motors has posted -2.75 and -2.88 EPS numbers when the estimates were -0.56 and -0.49 respectively.31 29 30 31 3 9
  13. 13. V. Analysts’ Recommendations Current 1 Month Ago 2 Months Ago 1 Year Ago Buy 1 1 1 1 Outperform 2 2 2 1 Hold 7 7 7 8 Underperform 0 0 1 3 Sell 3 3 3 3 No Opinion 2 2 2 0 Mean Rating 3.15 3.15 3.21 3.38 Table 732 There have been no changes to analysts’ recommendations over the past month. There has been a positive trend in the mean rating of the stock as it has decreased from 3.21 two months ago and 3.38 from one year ago. Analysts seem to be varied in their opinions on the future of the stock. There are currently more positive recommendations than negative ones. Ford’s mean rating is slightly larger than its main competitor, General Motors. The current mean rating is at 2.53 which is down from a 3.31 during the same time one year ago.33 32 33 10
  14. 14. VI. Institutional Ownership # of Holders % Beg. Holders Shares % Shares Shares Outstanding 2,130,000,000 100.00% Total Positions 489 105.62% 1,610,958,336 75.67% New Positions 64 13.82% 102,823,440 4.83% Soldout Positions 71 15.33% -63,588,344 -2.99% Buyers 252 54.43% 221,945,680 10.42% Sellers 226 48.81% -204,200,656 -9.59% Beg. Total Inst. Positions 463 100.00% 1,593,213,312 74.80% #Buyers - #Sellers 26 52.72% 17,745,024 0.83% 34 Table 8 Ford’s institutional ownership increased 0.83% as 17,745,024 shares moved from individual investors to institutional investors. There was a net increase of 26 institutional owners (252 buyers vs. 226 sellers). These two signs are bullish indicators. Every aspect of the chart above indicates a positive trend on institutional investment/ownership. Recent big purchases of shares have been made my Capital Research Global Investors, 44,016,000 shares totaling $296,227,680 as well as the Capital World Investors group with a total purchase of 23,138,418 shares worth $155,721,552.35 34 35 11
  15. 15. VII. Piotroski Analysis A. P/B ratio and quintile (1=growth, high P/B; 5=value, low P/B): _P/B Ratio = 2.83, 2nd Quintile__ B. Piotroski Score: ___6___ Piotroski Item Variable needed to compute Value Points 1. Positive net income TTM net income $-2,723,000,000 0 2. Positive cash flow TTM cash flow $17,074,000,000 1 3. Earnings Quality +19,797,000,000 1 4. Decreasing Debt Debt/assets most recent ann figure 0.60 Debt/assets previous ann figure 0.61 1 5. Increasing working capital Current ratio most recent ann figure 1.12 Current ratio previous ann figure 0.94 1 6. Improving Productivity Asset turnover most recent ann figure 0.62 Asset turnover previous ann figure 0.57 1 7. Growing Profitability ROA most recent ann figure 8.54% ROA previous ann figure 2.82% 1 8. Issuing Stock Shares outstanding most recent ann 2,195,000,000 Shares outstanding previous ann 1,885,000,000 0 9. Competitive Position Gross margin most recent ann N/A Gross margin previous ann N/A N/A Total 6 Table 936 Note* Data for table 8 was gathered from three different websites due to a lack of sufficient sources. The total Piotroski score may not be 100% accurate due to the problem stated and insufficient data. 36 12