Ford as a Potential Value Play

The share price of Ford Motor Co. (F) has fallen 43% in the past year to 8.01, from 14.14 as of January 3rd 2005. It is quite possible that "Mr. Market" (as Benjamin Graham affectionately anthropormophizes the overall stock market forces) , has underestimtated Ford's resiliency.

Ford is by no means out of the water yet, and a survey of top auto executives released today showed that 76% of auto executives polled believe that at least one major auto-related company will file for bankrupty in the next year.

However, Bill Ford is an industrious and innovative individual. Analysts believe that there is an as yet unannounced facet to his turnaround plan that has been in the works since 2003. Ford Motor Co. will announce some of the details of these restructuring plans which include layoffs and plant closures, on January 23rd.

There is already some positive news about Ford to be gleaned from the financial wires, as well as from some close analysis of the stock's statistics and balance sheets. Ford has increased year-over-year car sales for the first time since 1999, by focusing on new models such as the Ford Fusion, Mercury Milan and Lincoln Zephyr.

Statistically, there should be an existential floor to the stock price at or near the stock's current value. The cash per share value stands at 8.09, while the book value per share is currently 7.53. Interestingly enough, Ford's 52-week low price was most recently 7.57, a mere 4 cents above its book value per share. If Ford were a member of the Dow Jones Industrial Average, it would definitely qualify as one of the Dogs of the Dow stocks, with a current dividend yield ratio of an 4.70%.

If Bill Ford can pull this company through with some bold new restructuring campaign, then this stock would definitely be on my watch list if it drops any further at all, and once more nears its book value of 7.53.