Last update on 2024-06-06

Ford Motor (F) - Piotroski F-Score Analysis for Year 2023 (Final Score: 6/9)

Ford Motor's Piotroski F-Score for 2023 is 6/9, reflecting financial health and profitability. Detailed analysis covers key criteria and historical data.

Short Analysis - Piotroski Score: 6

We're running Ford Motor (F) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Ford Motor Company scored 6 out of 9 in the Piotroski F-Score criteria. The company exhibited positive signs of profitability, demonstrating a solid net income of $4.347 billion and a robust operating cash flow of $14.918 billion in 2023. This is paired with improvements in their Return on Assets and a higher Operating Cash Flow compared to Net Income. Despite an increase in leverage and a slight dip in the current ratio, Ford shows strength in share buybacks and improved asset turnover. However, the decline in gross margin and still lower Return on Assets compared to industry standards indicate areas needing improvement.

Insights for Value Investors Seeking Stable Income

While Ford shows promising signs in profitability and operational efficiency, potential investors should also consider its volatility and areas where the company lags behind industry standards, such as gross margin and leverage. Due to strong operational cash flow and positive trends in asset turnover, it is worth keeping an eye on Ford for possible investment opportunities, but with caution regarding their current liabilities and overall cost management issues.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Ford Motor (F)

Company has a positive net income?

Net income is a critical measure of a company's profitability over a specific period. A positive net income indicates that Ford Motor Company is generating more revenue than expenses, which is favorable for investors.

The net income for Ford Motor (F) in 2023 is $4.347 billion, which is positive. Over the past 20 years, the net income has shown considerable volatility, including periods of substantial losses, such as in 2006 ($-12.613 billion) and 2008 ($-14.672 billion). The latest positive figure of $4.347 billion is a strong indicator of financial health, particularly following a recent loss in 2020 ($-1.279 billion) and a gain in 2021 ($17.937 billion). Therefore, Ford Motor earns 1 point for this criterion, reinforcing a trend towards profitability.

Company has a positive cash flow?

The Piotroski F-score uses Cash Flow from Operations (CFO) to assess a company's ability to generate positive cash flow from its core business operations.

The Cash Flow from Operations (CFO) for Ford Motor (F) in 2023 stands at $14.918 billion. This positive value indicates that Ford is generating sufficient cash through its core operations, earning a point in this criterion. Over the last 20 years, Ford has had positive CFO in 19 out of those years, demonstrating robust operational efficiency. Notably, even during the financial instability in 2008, Ford's CFO was negative only once. This long-term capability to generate positive cash flow underscores Ford's resilience and operational strength, signifying a positive trend in this criterion.

Return on Assets (ROA) are growing?

Change in ROA measures the efficiency with which a company utilizes its assets to generate earnings. It signifies how well management is utilizing company assets to create profits.

Ford Motor Company (F) saw its Return on Assets (ROA) rise from -0.0077 in 2022 to 0.0164 in 2023. This shift from a negative ROA to a positive one is a marked improvement, reflecting enhanced asset efficiency in generating earnings. This increase receives one point under the Piotroski criteria. In comparison, the industry's median ROA was generally stable around figures like 0.1825 in 2023. Despite Ford's improvement, it lags behind its industry peers, reminding investors of the gap Ford needs to close to reach industry standards. Thus, the ROA trend is good concerning internal improvements but highlights the necessity for further enhancement to match industry benchmarks.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is crucial as it reflects the company's ability to generate cash from operations.

For the fiscal year 2023, Ford Motor (F) reported an Operating Cash Flow of $14.918 billion and Net Income of $4.347 billion. Since the Operating Cash Flow surpasses Net Income, Ford earns 1 point under this criterion. This trend is favorable for the company. Historically, Ford has exhibited varying levels of cash flow and net income. Notably, Ford faced substantial net losses in 2006 (-$12.613 billion) and 2008 (-$14.672 billion), while the Operating Cash Flow in those years were $9.611 billion and -$179 million, respectively. The most recent figures suggest a positive trend in the company's operational efficiency, reinforcing investor confidence.

Liquidity of Ford Motor (F)

Leverage is declining?

Change in Leverage measures a company's reliance on debt for financing. Lower leverage indicates financial health and lower risk.

The Leverage ratio for Ford Motor (F) increased from 0.3514 in 2022 to 0.3694 in 2023, indicating a rise in the company’s debt reliance. Over the past two decades, the firm's leverage has shown significant fluctuations, peaking in 2015 at 0.7822 and hitting a low in 2010 at 0.1034. Despite the slight increase in 2023, Ford's leverage is still considerably lower than its historical highs, but this year's increase could point to increased financial risk. Consequently, no point is awarded for this criterion.

Current Ratio is growing?

The current ratio assesses a company's ability to cover short-term liabilities with short-term assets. An increase suggests better short-term financial health.

In 2022, Ford Motor's current ratio was 1.2024, and in 2023 it slightly decreased to 1.1965. This change indicates a decrease in Ford's ability to cover its short-term liabilities with its short-term assets, albeit slightly. A comparative review of the industry median current ratio for 2023, which stands at 1.262, reveals that Ford lags behind the industry benchmark. Over the last 20 years, Ford's average current ratio has been mostly above the industry median, highlighting its historically stronger liquidity position. However, the slight dip in 2023 might raise concerns about marginal declines in liquidity management, yielding 0 points for this criterion.

Number of shares not diluted?

Change in shares outstanding reflects whether a company is issuing new shares or buying back shares. It is important as it can affect earnings per share (EPS) and shareholder value.

The outstanding shares of Ford Motor decreased from 4014000000 in 2022 to 3998000000 in 2023. This translates to a reduction of 0.40%, which indicates that Ford has likely engaged in share buybacks. This trend is generally seen as positive for investors as it can lead to an increase in EPS and can signal management's confidence in the company's value. Over the last 20 years, Ford's outstanding shares have generally seen growth spikes (notably after the 2008 financial crisis), but the recent trend of slight reductions can be considered favorable for shareholders.

Operating of Ford Motor (F)

Cross Margin is growing?

The change in gross margin (Gross Margin) is critical in assessing a company's core profitability. By comparing consecutive years' gross margins, we gather data about Ford's efficiency in producing goods and controlling costs.

From the given data, Ford Motors' gross margin decreased from 0.1086 in 2022 to 0.0917 in 2023. This represents a decline in its ability to maintain a higher percentage of revenue over the cost of goods sold (COGS). Such a decrease could be concerning as it signifies declining profitability during that period, given the gross margin gap widened compared to 2022. Furthermore, compared to the industry median, Ford's gross margin underperforms. In 2023, the industry median gross margin was 0.1825, almost double Ford's figure, indicating the company is not as cost-efficient or may have faced significant challenges. Adding the trend that over the last 20 years, the high was 0.2094 in 2003 and lowed drastically. Thus, by Piotroski's scorecard, this will score 0 points.

Asset Turnover Ratio is growing?

Asset Turnover measures a company's efficiency in using its assets to generate sales.

Asset Turnover for Ford Motor (F) increased from 0.6163 in 2022 to 0.6659 in 2023, which is a positive trend. This increase indicates that Ford is becoming more efficient in utilizing its assets to produce revenue. An upward trajectory in asset turnover often signifies management's effective use of company resources. Historically, the company's highest Asset Turnover ratio over the last 20 years was 0.7945 in 2011. This year's figure of 0.6659 also marks a steady recovery from a low of 0.4836 in 2020, reflecting better operational efficiency and asset utilization in recent years.