Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
CEO Mulally May Leave Ford Before End of Year
David Whiston, CFA, CPA, CFE
Senior Analyst
[email protected]
+1 (312) 384-5442
Analyst Note
The primary analyst covering this company
does not own its stock.
Research as of 21 Apr 2014
Estimates as of 11 Mar 2014
Pricing data through 18 Apr 2014
Rating updated as of 17 Apr 2014
Currency amounts expressed with "$" are in
U.S. dollars (USD) unless otherwise denoted.
21 Apr 2014
On Monday, Bloomberg broke the news that Ford president
and CEO Alan Mulally, 68, will resign before the end of this
year and be replaced by COO Mark Fields, 53. Ford has not
announced anything, so for now the story is only a rumor,
but these types of things have proved true in the past. For
example, in January 2012, Ford vehemently denied the
upcoming departure of then CFO Lewis Booth; Booth
resigned a few months later. Fields is a longtime Ford
veteran with stints running Mazda, Ford's former luxury
division Premier Automotive Group, Ford Europe, and most
recently the Americas.
Vital Statistics
Market Cap (USD Mil)
63,101
52-Week High (USD)
18.02
52-Week Low (USD)
12.65
52-Week Total Return %
27.1
YTD Total Return %
4.5
Last Fiscal Year End
31 Dec 2013
5-Yr Forward Revenue CAGR %
3.2
5-Yr Forward EPS CAGR %
8.6
Price/Fair Value
0.64
Valuation Summary and Forecasts
Fiscal Year:
Price/Earnings
EV/EBITDA
EV/EBIT
Free Cash Flow Yield %
Dividend Yield %
2012
2013
2014(E)
2015(E)
8.6
11.2
18.4
1.6
1.5
9.6
12.3
21.4
1.9
2.6
11.9
13.5
26.5
1.1
3.2
8.4
10.2
16.8
6.5
3.9
Financial Summary and Forecasts (USD Mil)
Contents
Analyst Note
1
Morningstar Analyst Forecasts
2
We are not changing our fair value estimate or moat rating,
nor is the news a surprise. We wrote in our Jan. 8 note that
we did not expect Mulally to stay beyond this year because
he has accomplished the turnaround Bill Ford hired him to
do. Should this rumor be true, it would deviate from Ford's
announced succession plan that Mulally would stay through
at least the end of 2014. We would like Mulally to stay for
many more years, but an earlier-than-announced departure
does not trouble us, since we believe Fields is ready to take
over. We do not expect Fields to deviate much, if at all, from
Mulally's One Ford strategy. Also, the sooner Ford makes
an announcement, the faster it ends the speculation as to
when Mulally will leave and if Fields will indeed succeed
him. Assuming Mulally is ready to leave, and given Fields'
deep Ford experience, we do not see a reason to keep the
latter waiting for the CEO job.
Assuming he takes over, we see Fields' immediate
challenges as the launch of the new generation F-Series
pickup later this year, retaining key members of senior
management, and reinventing Lincoln. One change we
would welcome would be an increase in share buybacks,
because Ford's stock is trading well below our fair value
estimate.
Fiscal Year:
Revenue
Revenue YoY %
EBIT
EBIT YoY %
Net Income, Adjusted
Net Income YoY %
2012
2013
2014(E)
2015(E)
126,567
139,369
138,452
147,712
-1.3
10.1
-0.7
6.7
5,709
5,588
4,570
7,198
-7.9
-2.1
-18.2
57.5
6,036
6,557
5,531
7,790
8.9
8.6
-15.7
40.8
Diluted EPS
1.50
1.60
1.35
1.91
Diluted EPS YoY %
11.5
6.7
-15.7
40.8
Free Cash Flow
1,268
1,872
839
4,245
Free Cash Flow YoY %
-86.5
47.6
-55.2
406.1
Historical/forecast data sources are Morningstar Estimates and may reflect adjustments.
Analyst Note: EPS for consolidated company while financial statements exclude Ford Motor
Credit.
Profile
Ford Motor Company manufactures automobiles under its Ford and Lincoln
brands. The company has about 16% market share in the United States and
nearly 8% share in Europe. Sales in North America and Europe made up
64% and 20% of 2013 auto revenue, respectively. The company also owns
3.5% of Mazda. Ford has about 181,000 employees and is based in Dearborn,
Mich.
© Morningstar 2014. All Rights Reserved. Morningstar's Credit Ratings & Research is produced and offered by Morningstar, Inc., which is not registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization
(“NRSRO”). Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided
solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise
required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Page 1 of 6
Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
Morningstar Analyst Forecasts
Financial Summary and Forecasts
Fiscal Year Ends in December
Forecast
3-Year
Hist. CAGR
2011
2012
2013
2014
2015
5-Year
Proj. CAGR
5.3
-1.2
-2.0
2.0
2.7
1.2
-33.9
7.5
7.1
-5.4
-10.3
-8.9
196.5
45.2
-1.3
-7.9
-4.1
8.9
11.5
-79.0
-86.5
10.1
-2.1
3.8
8.6
6.7
65.9
47.6
-0.7
-18.2
-8.2
-15.7
-15.7
-28.2
-55.2
6.7
57.5
32.5
40.8
40.8
45.5
406.1
3.2
11.0
8.3
8.6
8.6
6.1
26.9
Profitability
3-Year
Hist. Avg
2011
2012
2013
2014
2015
5-Year
Proj. Avg
Operating Margin %
EBITDA Margin %
Net Margin %
Free Cash Flow Margin %
ROIC %
Adjusted ROIC %
Return on Assets %
Return on Equity %
4.5
7.4
4.6
3.2
20.4
28.3
12.4
-146.4
4.8
7.7
4.3
7.3
41.6
57.5
25.4
-555.8
4.5
7.4
4.8
1.0
7.6
11.2
5.6
70.6
4.0
7.0
4.7
1.3
12.0
16.3
6.2
46.0
3.3
6.5
4.0
0.6
8.5
10.8
4.8
24.5
4.9
8.0
5.3
2.9
12.0
14.5
7.1
31.1
5.3
8.5
5.6
3.0
12.1
15.0
7.6
27.9
Leverage
3-Year
Hist. Avg
2011
2012
2013
2014
2015
5-Year
Proj. Avg
0.61
1.49
12.33
0.69
1.33
12.01
0.66
1.52
13.19
0.49
1.61
11.78
0.43
1.61
10.54
0.34
1.00
16.10
0.28
0.90
20.58
Growth (% YoY)
Revenue
EBIT
EBITDA
Net Income
Diluted EPS
Earnings Before Interest, after Tax
Free Cash Flow
Debt/Capital
Total Debt/EBITDA
EBITDA/Interest Expense
Valuation Summary and Forecasts
Price/Fair Value
Price/Earnings
EV/EBITDA
EV/EBIT
Free Cash Flow Yield %
Dividend Yield %
Discounted Cash Flow Valuation
2012
2013
2014(E)
2015(E)
0.65
8.6
11.2
18.4
1.6
1.5
0.59
9.6
12.3
21.4
1.9
2.6
—
11.9
13.5
26.5
1.1
3.2
—
8.4
10.2
16.8
6.5
3.9
Key Valuation Drivers
Cost of Equity %
Pre-Tax Cost of Debt %
Weighted Average Cost of Capital %
Long-Run Tax Rate %
Stage II EBI Growth Rate %
Stage II Investment Rate %
Perpetuity Year
10.0
4.0
9.1
32.6
4.0
20.0
10
Additional estimates and scenarios available for download at http://select.morningstar.com.
USD Mil
Firm Value
(%)
Per Share
Value
Present Value Stage I
Present Value Stage II
Present Value Stage III
17,535
20,036
52,114
19.6
22.3
58.1
4.29
4.90
12.75
Total Firm Value
89,685
100.0
21.94
25,116
-15,683
—
243
—
—
—
—
6.15
-3.84
—
0.06
99,361
—
24.31
Cash and Equivalents
Debt
Preferred Stock
Other Adjustments
Equity Value
Projected Diluted Shares
Fair Value per Share (USD)
4,087
—
The data in the table above represent base-case forecasts in the company’s reporting
currency as of the beginning of the current year. Our fair value estimate may differ from the
equity value per share shown above due to our time value of money adjustment and in cases
where probability-weighted scenario analysis is performed.
© Morningstar 2014. All Rights Reserved. Morningstar's Credit Ratings & Research is produced and offered by Morningstar, Inc., which is not registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization
(“NRSRO”). Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided
solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise
required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Page 2 of 6
Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
Morningstar Analyst Forecasts
Income Statement (USD Mil)
Fiscal Year Ends in December
Forecast
2011
2012
2013
2014
2015
Revenue
128,168
126,567
139,369
138,452
147,712
Cost of Goods Sold
Gross Profit
112,909
15,259
111,852
14,715
123,784
15,585
124,105
14,347
130,137
17,574
Selling, General & Administrative Expenses
Other Operating Expense (Income)
Other Operating Expense (Income)
Depreciation & Amortization (if reported separately)
Operating Income (ex charges)
9,060
—
—
—
6,199
9,006
—
—
—
5,709
9,997
—
—
—
5,588
9,777
—
—
—
4,570
10,376
—
—
—
7,198
Restructuring & Other Cash Charges
Impairment Charges (if reported separately)
Other Non-Cash (Income)/Charges
Operating Income (incl charges)
—
—
—
6,199
—
—
—
5,709
1,450
—
-2,039
6,177
—
—
—
4,570
—
—
—
7,198
Interest Expense
Interest Income
Pre-Tax Income
817
471
5,853
713
1,080
6,076
829
1,092
6,440
850
895
4,615
738
854
7,315
Income Tax Expense
-11,541
2,056
2,010
1,615
2,341
Other After-Tax Cash Gains (Losses)
Other After-Tax Non-Cash Gains (Losses)
(Minority Interest)
(Preferred Dividends)
Net Income
479
—
-9
—
17,864
555
—
1
—
4,576
1,046
—
7
—
5,483
1,360
—
7
—
4,366
1,564
—
7
—
6,545
Weighted Average Diluted Shares Outstanding
Diluted Earnings Per Share
4,111
4.35
4,015
1.14
4,087
1.34
4,087
1.07
4,087
1.60
Adjusted Net Income
Diluted Earnings Per Share (Adjusted)
5,541
1.35
6,036
1.50
6,557
1.60
5,531
1.35
7,790
1.91
—
0.19
0.39
0.50
0.60
9,812
9,812
9,407
9,407
10,351
9,762
8,962
8,962
11,878
11,878
Dividends Per Common Share
EBITDA
Adjusted EBITDA
© Morningstar 2014. All Rights Reserved. Morningstar's Credit Ratings & Research is produced and offered by Morningstar, Inc., which is not registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization
(“NRSRO”). Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided
solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise
required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Page 3 of 6
Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
Morningstar Analyst Forecasts
Balance Sheet (USD Mil)
Fiscal Year Ends in December
Forecast
2011
2012
2013
2014
2015
Cash and Equivalents
Investments
Accounts Receivable
Inventory
Deferred Tax Assets (Current)
Other Short Term Assets
Current Assets
22,949
—
4,219
5,901
1,791
3,850
38,710
24,425
—
5,361
7,362
3,488
4,236
44,872
25,116
—
5,641
7,708
1,574
4,580
44,619
22,366
—
5,604
8,500
1,574
4,580
42,624
21,357
—
5,979
8,557
1,574
4,580
42,047
Net Property Plant, and Equipment
Goodwill
Other Intangibles
Deferred Tax Assets (Long-Term)
Other Long-Term Operating Assets
Long-Term Non-Operating Assets
Total Assets
23,585
100
—
—
—
15,481
77,876
26,228
87
—
—
—
15,271
86,458
28,876
—
—
—
—
16,107
89,602
32,084
—
-100
—
—
16,107
90,715
35,205
—
-200
—
—
16,107
93,158
Accounts Payable
Short-Term Debt
Deferred Tax Liabilities (Current)
Other Short-Term Liabilities
Current Liabilities
14,015
1,033
—
2,734
17,782
15,107
1,386
—
3,044
19,537
18,035
1,257
—
—
19,292
18,082
1,257
—
—
19,339
18,961
1,257
—
—
20,218
Long-Term Debt
Deferred Tax Liabilities (Long-Term)
Other Long-Term Operating Liabilities
Long-Term Non-Operating Liabilities
Total Liabilities
12,061
—
—
42,208
72,051
12,870
—
—
46,502
78,909
14,426
—
—
38,899
72,617
13,169
—
—
38,899
71,407
10,641
—
—
38,899
69,758
Preferred Stock
Common Stock
Additional Paid-in Capital
Retained Earnings (Deficit)
(Treasury Stock)
Other Equity
Shareholder's Equity
—
—
—
5,782
—
—
5,782
—
—
—
7,185
—
—
7,185
—
—
—
16,654
—
—
16,654
—
—
—
18,977
—
—
18,977
—
—
—
23,070
—
—
23,070
Minority Interest
Total Equity
43
5,825
364
7,549
331
16,985
331
19,308
331
23,401
© Morningstar 2014. All Rights Reserved. Morningstar's Credit Ratings & Research is produced and offered by Morningstar, Inc., which is not registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization
(“NRSRO”). Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided
solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise
required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Page 4 of 6
Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
Morningstar Analyst Forecasts
Cash Flow (USD Mil)
Forecast
Fiscal Year Ends in December
2011
2012
2013
2014
2015
18,447
4,466
5,755
4,359
6,538
3,533
80
163
—
—
—
-478
3,655
43
134
—
—
—
-781
4,064
110
152
—
—
—
235
4,292
100
147
—
—
—
—
4,579
100
156
—
—
—
—
-1,007
-367
-11,566
-230
793
9,368
-1,436
-1,401
1,444
-520
662
6,266
-1,537
-572
-494
-1,332
1,357
7,738
37
-792
—
47
—
8,190
-375
-57
—
879
—
11,820
(Capital Expenditures)
Net (Acquisitions), Asset Sales, and Disposals
Net Sales (Purchases) of Investments
Other Investing Cash Flows
Cash From Investing
-4,272
—
-828
3,559
-1,541
-5,459
—
-2,898
333
-8,024
-6,566
—
-1,877
332
-8,111
-7,500
—
—
—
-7,500
-7,700
—
—
—
-7,700
Common Stock Issuance (or Repurchase)
Common Stock (Dividends)
Short-Term Debt Issuance (or Retirement)
Long-Term Debt Issuance (or Retirement)
Other Financing Cash Flows
Cash From Financing
—
—
2,056
-8,058
70
-5,932
-125
-763
1,707
-810
31
40
-213
-1,574
2,117
-1,439
287
-822
—
-2,044
—
-1,257
-140
-3,440
—
-2,452
—
-2,528
-149
-5,129
-231
1,664
—
-1,718
-93
-1,288
—
-2,750
—
-1,009
Net Income
Depreciation
Amortization
Stock-Based Compensation
Impairment of Goodwill
Impairment of Other Intangibles
Deferred Taxes
Other Non-Cash Adjustments
(Increase) Decrease in Accounts Receivable
(Increase) Decrease in Inventory
Change in Other Short-Term Assets
Increase (Decrease) in Accounts Payable
Change in Other Short-Term Liabilities
Cash From Operations
Exchange Rates, Discontinued Ops, etc. (net)
Net Change in Cash
© Morningstar 2014. All Rights Reserved. Morningstar's Credit Ratings & Research is produced and offered by Morningstar, Inc., which is not registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization
(“NRSRO”). Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided
solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise
required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. See last page for important disclosures.
Page 5 of 6
Morningstar Equity Research
Ford Motor Co F (NYSE) | QQQQ
Last Price
Fair Value
Consider Buy
Consider Sell
Uncertainty
Economic Moat™
Moat Trend™
Stewardship
Morningstar Credit Rating
Industry Group
16.00 USD
25.00 USD
15.00 USD
38.75 USD
High
None
Negative
Standard
BBB-
Autos
© 2014 Morningstar. All Rights Reserved. Unless stated
otherwise, this report was prepared by the person(s) noted
in their capacity as Equity Analysts employed by
Morningstar, Inc., including its global affiliates. It has not
been made available to the issuer prior to publication.
The Morningstar Rating for stocks identifies stocks trading
at a discount or premium to their intrinsic value. Five-star
stocks sell for the biggest risk-adjusted discount whereas
one-star stocks trade at premiums to their intrinsic value.
Based on a fundamentally focused methodology and a
robust, standardized set of procedures and core valuation
tools used by Morningstar’s Equity Analysts, four key
components drive the Morningstar Rating: 1. Assessment
of the firm’s economic moat, 2. Estimate of the stock’s fair
value, 3. Uncertainty around that fair value estimate and 4.
Current market price. Further information on Morningstar’s
methodology is available from http://global.morningstar.
com/equitydisclosures.
It has not been determined in advance whether and in what
intervals this document will be updated. No material
interests are held by Morningstar or the Equity Analyst in
the financial products that are the subject of the research
reports or the product issuer. Regarding Morningstar’s
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comply with the CFA Institute’s Code of Ethics and Standards
of Professional Conduct and 2) Equity Analysts’
compensation is derived from Morningstar’s overall earning
and consists of salary, bonus and in some cases restricted
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