Cramer often discussed Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) in the same breath. For the former, he has often expressed optimism about a business recovery, while for the latter, he has repeatedly praised the firm’s CEO, Mary Barra. In his morning appearance on September 3rd, Cramer continued along the same lines:
“I adore Farley, stock’s moving up. You gotta stop with the recalls. Gotta stop with the recalls. My Ford truck is, I get more notes from Ford than I do almost anybody. Well, look, I don’t want to make fun of Farley cause he’s really doing a good job and I wish the best for that. But they still have some quality problems that they have to work through.
“Ford has got to be, Ford’s a little big hat no cattle right now. And look at the chart of Ford versus GM. That is the most telling thing you’re gonna see. Because Mary Barra, quietly, is, doing better. . .I want Farley to win so bad, he’s such a terrific guy.”
For Ford Motor Company, the debate surrounds its financial performance. On the growth front, the firm’s Ford Pro commercial division grew software subscriptions by 35% annually in the second quarter. At the same time, management increased full year EBIT guidance to $10 billion to $11 billion in the second quarter for a marked jump over the previous guidance of $8 billion to $10 billion. The software and EBIT growth is a breath of fresh air as the firm’s EV troubles continue to drag it down. For instance, in the second quarter, Ford Motor Company’s EV business unit burned $1.3 billion in cash which can lead to a full year loss of $4 billion. Additionally, lower Gen-1 EV sales led to the firm’s Q2 revenue dropping by $1.9 billion annually to $48.3 billion.
Looking at General Motors Company, the firm is doing well on the financial front. While it is also facing EV headwinds, courtesy of $2.3 billion in EV charges and $4.1 billion in EV reset payments in the first half, it nevertheless managed to turn a $1.3 billion profit in the second quarter. Looking at its revenue, General Motors Company grew sales by 1.9% to $48 billion and sat at the same level as Ford in terms of revenue. Additionally, on a non-operational bullish front, the firm also plans buy back as much as $6 billion in shares. For Cramer, who has repeatedly advised NVIDIA to buy back its stock, the decision might be factoring into his favorable opinion of General Motors Company.
On the valuation front, General Motors Company’s forward P/E ratio of 5.74 is lower than Ford’s 7.46. However, Ford’s short interest as a percentage of float is almost nonexistent, while it stands at 2.48% for GM. Looking at hedge fund interest, Insider Monkey’s data shows that Ford’s business troubles might be affecting the funds. In Q2, 75 funds had held a stake in General Motors Company while the figure was 50 for GM.
READ NEXT: Jim Cramer Draws the Line on NVIDIA in China: Why National Security Comes First and Jim Cramer Defends His Dell Stance as Investors Complain About Missing Out.
