The Ford Motor (NYSE:F) stock price has risen over 100% in the past year. The motor company which once revolutionised the auto industry appointed a new CEO, Mr James D. Farley Jr. late 2020. Farley had previously worked with Toyota and helped develop the Lexus brand. Since his introduction into Ford, he’s helped turn around the firm’s European operations, increasing profitability and sales for the company.
Great leadership can be a game-changer for any company. And so far, it seems Farley is delivering substantial value for shareholders. So is it time to buy the company’s stock? Let’s take a look.
Fundamentals beyond the Ford stock price
As far as I can tell, the surge in Ford’s stock price is backed by the numbers. The new trend in the auto industry is electric vehicles (EVs). So it’s not surprising to see Ford achieve a 117% increase in sales of its EVs, according to the latest earnings report. The company recorded a sale of 56,570 of these electrified vehicles setting a new all-time high. While encouraging, the company still has a long way to go in catching up to other EV leaders like Tesla, which delivered over 200,000 vehicles in Q2 2021.
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Overall, there was still a 26.9% drop in the company’s total US vehicle sales compared to the same period in 2020. However, given the ongoing semi-conductor chip shortage decimating the entire auto industry, I think this is pretty understandable and is ultimately a short-term problem. In the meantime, Ford is reporting growth in other areas.
For instance, its Bronco Sport and Mustang MachE models have propelled its retail SUVs sales to their best half-year performance in 20 years. Also, the Lincoln SUVs posted a new H1 sales record. In the same vein, Ford Rangers saw its best half since 2005. Therefore, I think the changes brought by the new leadership are having a positive effect on the company and, in turn, the Ford stock price.
Is it time to buy?
At its current price of $15.64 per share, I’m considering adding some Ford stock to my portfolio. Aside from the aforementioned results, the group is making significant strides in its operational expansion.
It’s investing heavily into battery technology. And recently announced the construction of its Blue Oval City, a new mega Campus in Tennessee, and Twin Battery Plants in Kentucky. Upon completion of these plants, the company’s production capacity within the electric vehicle space will improve significantly, in my opinion.
The challenges lie ahead
This business has been around for 118 years. Surviving that long is clear evidence in my mind of an enterprise capable of adapting to an evolving market. However, despite the encouraging progress made on the EV front, the firm is still far behind some of its competition.
This slow transition may cause the company to struggle to capture market share from rival EV pure-play businesses like Tesla, which currently dominates in the US and Europe.
Yet, while this is a significant threat to its growth prospects, I still believe that the Ford stock price can continue to climb over the long term.
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Prosper Ambaka owns shares in Ford Motor Company. The Money Cog has no position in any of the companies mentioned at the time of writing. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
