From a valuation point of view, Ford still offers plenty of upside potential. In terms of its P/E and forward P/E ratios, the stock is much cheaper than its Japanese competitors Honda Motor Co Ltd (NYSE:HMC) and Toyota Motor Corporation (ADR) (NYSE:TM), yet trading in line with American peer General Motors (NYSE:GM). But Ford pays a juicy dividend yield of 2.9%, while GM pays no dividends at all.
Not only is the dividend relevant in terms of valuation and distributing cash to shareholders, it also shows that management is confident enough in the future of the company to return some of Ford´s cash flow to investors.
In an industry which is known for its tough competitive landscape and capital-intensive business model, Ford Motor Company (NYSE:F) is generating more money than it needs to reinvest in the business, and that should be comforting news to investors in the company.
Ford is benefitting from a recovering truck market thanks to its dominant position in that business with the popular F-Series model. In addition to that, products like Escape and Fusion are proving that the company can successfully expand into other categories and compete head-to-head against Honda Motor Co Ltd (NYSE:HMC) and Toyota Motor Corporation (ADR) (NYSE:TM). The stock is still attractively valued, so maybe it´s time to take a ride in this iconic American automaker.
The article 3 Reasons Why Ford Will Keep Moving Forward originally appeared on Fool.com and is written by Andrés Cardenal.
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