Portfolio Construction and Analysis
Running head: FULL SECURITY ANALYSIS 1
FULL SECURITY ANALYSIS 7
Full Security Analysis
Jonathan Max Burkett
Ford motor financial analysis
Ford motor company is my choice for analysis in this case study and it forms part of my portfolio. The company operated in the vast automobile industry will its operations being spread across all over the world. The article will simply report the full security analysis while comparing it to the industry ratios.
The first ratio is the price to earnings ratio which is simply the price of the companies stock divided by the earnings per share. The ratio is currently at $ 27.22 and this means that the investor have to pay 22 dollars in order to get a dollar return to their investments at ford motors. The ratio is consistence with the industry ratios since an investor has to pay an average of $30 in order to get a dollar return in the automobile industry, it therefore shows that the company is performing well in relation to the industry.
The price to book ratio is a not commonly used in analyzing stocks but is a very important ratio in determine the worthiness of a company’s stock, the price to book ratio shows how an asset is valued depending on the owners’ equity. The ratio is calculated by dividing the stock price with the book value per share. A price to book ratio of less than one is considered very attractive and sows that the share is not undervalued. The ford motors price to book value is 0.01 and is therefore very attractive to potential investors. The industry price to book ratio is at 1.54 and therefore the company is performing better than the industry average.
The profit margin is a common term in income analysis and simply means the percentage of sales that is converted into profit after deducting the company’s cost of goods sold. Ford motors profit margin is at 11% while the industry’s profit margin is at 14.82 and therefore the company is performing poor compared to the industry, it shows that the company is manufacturing at a higher cost or selling at lower price compared to the industry average. Another important ratio is the dividend yield, it is the amount investor’s gain in form of dividends relative to the company’s market price per share. The company’s dividend yield is at 2% while the market dividend yield is at 1.34% and this shows that the company’s payout ratio is higher than the industry’s payout ratio, as an investor, that is a positive factor in valuation of the stock.
Finally the earnings growth rate is the rate at which the company’s net earnings are changing. The earnings growth rate is simply the percentage change of the company’s previous earnings per share compared to the most current earnings per share. Ford Motors Company scores a -52% in earnings growth estimate and this is not an attractive figure, the company has too work hard to ensure that earnings growth rate is positive. The industry growth rates were estimated to be -13.3 and this shows that the company’s earnings have a positive relationships with the industry growth rates.
The most important ratio to the investor is the beta of a stock, the stock beta is simply the risk coefficient of a stock in relation to a benchmark asset or stock. The company’s beta is at 0.182 and several deductions can be made from the stocks beta. First, the stock has a positive relationship with the market movement although the relationship is very minimal, this is due to the fact that the stock beta has a positive coefficient which is less than five and therefore no a strong relationship. For the investors, the stock can be used in risk diversification since the relationship is not much strong. The ratios and the calculations helps in analyzing the stock that is in your portfolio so as to develop expectations and to know how the stock relates to the industry, it is the tool investors use to determine the stocks to invest into.
Appendices
|
Earnings Estimate |
Current Qtr. (Mar 2019) |
Next Qtr. (Jun 2019) |
Current Year (2019) |
Next Year (2020) |
|
No. of Analysts |
14 |
14 |
21 |
18 |
|
Avg. Estimate |
0.28 |
0.29 |
1.26 |
1.41 |
|
Low Estimate |
0.16 |
0.15 |
0.95 |
0.72 |
|
High Estimate |
0.37 |
0.37 |
1.45 |
1.9 |
|
Year Ago EPS |
0.43 |
0.27 |
1.3 |
1.26 |
|
Revenue Estimate |
Current Qtr. (Mar 2019) |
Next Qtr. (Jun 2019) |
Current Year (2019) |
Next Year (2020) |
|
No. of Analysts |
10 |
10 |
16 |
15 |
|
Avg. Estimate |
37.47B |
35.72B |
145.92B |
147.55B |
|
Low Estimate |
35.34B |
33.6B |
139.7B |
138.62B |
|
High Estimate |
39.1B |
37.83B |
156.05B |
156.38B |
|
Year Ago Sales |
39.01B |
35.91B |
148.29B |
145.92B |
|
Sales Growth (year/est) |
-3.90% |
-0.50% |
-1.60% |
1.10% |
|
Earnings History |
3/30/2018 |
6/29/2018 |
9/29/2018 |
12/30/2018 |
|
EPS Est. |
0.41 |
0.31 |
0.28 |
0.32 |
|
EPS Actual |
0.43 |
0.27 |
0.29 |
0.3 |
|
Difference |
0.02 |
-0.04 |
0.01 |
-0.02 |
|
Surprise % |
4.90% |
-12.90% |
3.60% |
-6.30% |
|
EPS Trend |
Current Qtr. (Mar 2019) |
Next Qtr. (Jun 2019) |
Current Year (2019) |
Next Year (2020) |
|
Current Estimate |
0.28 |
0.29 |
1.26 |
1.41 |
|
7 Days Ago |
0.28 |
0.32 |
1.3 |
1.49 |
|
30 Days Ago |
0.3 |
0.34 |
1.33 |
1.53 |
|
60 Days Ago |
0.3 |
0.34 |
1.33 |
1.54 |
|
90 Days Ago |
0.3 |
0.34 |
1.32 |
1.52 |
|
EPS Revisions |
Current Qtr. (Mar 2019) |
Next Qtr. (Jun 2019) |
Current Year (2019) |
Next Year (2020) |
|
Up Last 7 Days |
N/A |
1 |
1 |
1 |
|
Up Last 30 Days |
2 |
3 |
3 |
2 |
|
Down Last 7 Days |
N/A |
N/A |
N/A |
N/A |
|
Down Last 30 Days |
1 |
N/A |
N/A |
N/A |
|
Growth Estimates |
F |
Industry |
Sector |
S&P 500 |
|
Current Qtr. |
-34.90% |
N/A |
N/A |
0.10 |
|
Next Qtr. |
7.40% |
N/A |
N/A |
0.04 |
|
Current Year |
-3.10% |
N/A |
N/A |
0.15 |
|
Next Year |
11.90% |
N/A |
N/A |
0.08 |
|
Next 5 Years (per annum) |
3.80% |
N/A |
N/A |
0.12 |
|
Past 5 Years (per annum) |
2.86% |
N/A |
N/A |
N/A |
Income Statement
All numbers in thousands
|
Revenue |
12/31/2018 |
12/31/2017 |
12/31/2016 |
12/31/2015 |
|
Total Revenue |
- |
156,776,000 |
151,800,000 |
149,558,000 |
|
Cost of Revenue |
- |
140,197,000 |
134,616,000 |
131,410,000 |
|
Gross Profit |
- |
16,579,000 |
17,184,000 |
18,148,000 |
|
Operating Expenses |
||||
|
Research Development |
- |
- |
- |
- |
|
Selling General and Administrative |
- |
9,770,000 |
12,597,000 |
10,097,000 |
|
Non Recurring |
- |
- |
- |
- |
|
Others |
- |
- |
- |
- |
|
Total Operating Expenses |
- |
149,967,000 |
147,213,000 |
141,507,000 |
|
Operating Income or Loss |
- |
6,809,000 |
4,587,000 |
8,051,000 |
|
Income from Continuing Operations |
||||
|
Total Other Income/Expenses Net |
- |
1,339,000 |
2,209,000 |
2,201,000 |
|
Earnings Before Interest and Taxes |
- |
6,809,000 |
4,587,000 |
8,051,000 |
|
Interest Expense |
- |
-1,136,000 |
-899,000 |
-773,000 |
|
Income Before Tax |
- |
8,148,000 |
6,796,000 |
10,252,000 |
|
Income Tax Expense |
- |
520,000 |
2,189,000 |
2,881,000 |
|
Minority Interest |
- |
126,000 |
113,000 |
109,000 |
|
Net Income From Continuing Ops |
- |
7,628,000 |
4,607,000 |
7,371,000 |
|
Non-recurring Events |
||||
|
Discontinued Operations |
- |
- |
- |
- |
|
Extraordinary Items |
- |
- |
- |
- |
|
Effect Of Accounting Changes |
- |
- |
- |
- |
|
Other Items |
- |
- |
- |
- |
|
Net Income |
||||
|
Net Income |
- |
7,602,000 |
4,596,000 |
7,373,000 |
|
Preferred Stock And Other Adjustments |
- |
- |
- |
- |
|
Net Income Applicable To Common Shares |
- |
7,602,000 |
4,596,000 |
7,373,000 |
Balance Sheet
All numbers in thousands
|
Period Ending |
12/31/2018 |
12/31/2017 |
12/31/2016 |
12/31/2015 |
|
Current Assets |
||||
|
Cash And Cash Equivalents |
- |
8,934,000 |
7,828,000 |
5,386,000 |
|
Short Term Investments |
- |
17,554,000 |
19,642,000 |
18,181,000 |
|
Net Receivables |
- |
10,599,000 |
11,102,000 |
11,042,000 |
|
Inventory |
- |
10,277,000 |
8,898,000 |
8,319,000 |
|
Other Current Assets |
- |
2,631,000 |
3,145,000 |
2,704,000 |
|
Total Current Assets |
- |
115,902,000 |
108,461,000 |
102,587,000 |
|
Long Term Investments |
- |
3,347,000 |
3,523,000 |
3,244,000 |
|
Property Plant and Equipment |
- |
36,901,000 |
33,692,000 |
32,177,000 |
|
Goodwill |
- |
75,000 |
50,000 |
6,000 |
|
Intangible Assets |
- |
213,000 |
198,000 |
124,000 |
|
Accumulated Amortization |
- |
- |
- |
- |
|
Other Assets |
- |
18,426,000 |
14,894,000 |
16,154,000 |
|
Deferred Long Term Asset Charges |
- |
10,973,000 |
9,705,000 |
11,509,000 |
|
Total Assets |
- |
257,808,000 |
237,951,000 |
224,925,000 |
|
Current Liabilities |
||||
|
Accounts Payable |
- |
22,115,000 |
21,296,000 |
20,272,000 |
|
Short/Current Long Term Debt |
- |
1,960,000 |
1,361,000 |
961,000 |
|
Other Current Liabilities |
- |
18,299,000 |
16,277,000 |
16,084,000 |
|
Total Current Liabilities |
- |
94,600,000 |
90,281,000 |
82,336,000 |
|
Long Term Debt |
- |
12,575,000 |
13,222,000 |
11,060,000 |
|
Other Liabilities |
- |
24,419,000 |
25,086,000 |
23,959,000 |
|
Deferred Long Term Liability Charges |
- |
- |
- |
- |
|
Minority Interest |
- |
126,000 |
113,000 |
109,000 |
|
Negative Goodwill |
- |
- |
- |
- |
|
Total Liabilities |
- |
222,792,000 |
208,668,000 |
196,174,000 |
|
Stockholders' Equity |
||||
|
Misc. Stocks Options Warrants |
- |
- |
- |
- |
|
Redeemable Preferred Stock |
- |
- |
- |
- |
|
Preferred Stock |
- |
- |
- |
- |
|
Common Stock |
- |
41,000 |
41,000 |
41,000 |
|
Retained Earnings |
- |
21,218,000 |
15,634,000 |
14,414,000 |
|
Treasury Stock |
- |
-8,212,000 |
-8,135,000 |
-7,234,000 |
|
Capital Surplus |
- |
21,843,000 |
21,630,000 |
21,421,000 |
|
Other Stockholder Equity |
- |
-6,959,000 |
-7,013,000 |
-6,257,000 |
|
Total Stockholder Equity |
- |
34,890,000 |
29,170,000 |
28,642,000 |
|
Net Tangible Assets |
- |
34,602,000 |
28,922,000 |
28,512,000 |