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Is Ford Motor Company (F) the Best-Valued Automaker?

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Up close to 17% year to date, Ford Motor Company (NYSE:F) hasn’t had quite the same 2012 as some of its peers, but it may provide the best value going forward.

Ford’s revenues are expected to be up only 3% this year due to weakness in Europe and slowing growth in the Americas. The company expects to return to profitability in Europe before 2015, achieving long-term operating margins of 8%. Also helping a turnaround will be Ford’s transition from trucks to smaller cars, which will allow for better global market penetration; over a third of small car demand is expected to come from Asia.

CITADEL INVESTMENT GROUP

Ford has been showing a particular focus on high-demand hybrid vehicles, with initiatives to invest $135 million in the space over the next few years. The company’s bottom line is expected to benefit from moving some manufacturing operations into India, and around 80% of Ford’s global growth can come from China and India over the next decade. Billionaires Jim Simons, D.E. Shaw and Ken Griffin were all adding large amounts of Ford shares to their portfolio last quarter (see Ken Griffin’s newest picks here).

From a valuation standpoint, Ford is cheaper than most of the other top-tier car companies. The stock trades at a current P/E of only 3x, while General Motors Company (NYSE:GM)‘s earnings multiple is more than thrice that of Ford. We also find the profitability argument very compelling; Ford has the highest margins – 12% EBITDA margin and 8% operating margin – of the five stocks listed here. Based on next year’s EPS estimates, Ford could see upside of 20% by Christmas 2013, and a 1.6% dividend yield is better than most automakers will pay.

GM, meanwhile, is Ford’s biggest competitor, and is up over 35% year to date. Compared to the Japanese automakers, GM is also a bit cheaper on the valuation front. Despite its strong performance of late, the company still has the weakest profitability in the industry with an 8% EBITDA Margin and a 5% operating margin. GM calls billionaire David Einhorn as one of its top shareholders (check out David Einhorn’s top picks).

What about Toyota and Honda?

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