It is likely no secret by now that legacy automaker Ford (F) and its primary competitor General Motors (GM) have been, basically, at each other’s throat for years. To that end, it should surprise no one that, as soon as GM landed a win of its own at the Nurburgring track, it would not be long before Ford took it on. And that is, indeed, what is happening after Ford CEO Jim Farley declared, “Game on.” Investors were a little less than pleased, though, sending shares down fractionally in Thursday afternoon’s trading.
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A while back, Ford delivered a win at Nurburgring, as its Mustang GTD managed to bring in a lap record. GM, not surprisingly, wanted a piece of that action for itself, and thus sent out the Corvette ZR1X and the ZR1 to take a stab at it. Both delivered, and now, Ford is behind GM. It did not take long for Ford to respond, though; within hours, Farley himself congratulated the Corvette team and then declared, “Game on.”
Now, there is a new Mustang GTD out running laps at Nurburgring, with some clear aero modifications involved. One key point of this new prototype is an aerodisc cover, a kind of lightweight wheel cover that helps deliver greater downforce, useful for better cornering. Another dive plane has been added to each side of the bumper as well.
Growing Challenges
With Ford’s earnings report incoming, Ford is facing several challenges going forward. The loss of $5 billion from the electric vehicle unit, as well as $2 billion in tariff-related losses, will clearly hurt going forward. There is also the matter of mounting repair costs in the face of recall after recall after recall.
Ford also has some more potentially problematic issues lurking in the background. Its debt-to-equity ratio, reports note, stands at 3.56, which denotes a high amount of leverage in play. That by itself may not be so much of a problem, but the Altman-Z score, reports note, is a much bigger problem. Standing at 1.02, this suggests a potential risk of bankruptcy in the next two years.
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 10.59% rally in its share price over the past year, the average F price target of $11.40 per share implies 7.24% downside risk.
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