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Varchild2008 (84.60)

What's a Fair value for FORD shares if Q1 eps is 38 cents?

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April 11, 2010 – Comments (3) | RELATED TICKERS: F

What if (F) Ford reports an EPS of 38 cents per share in Q1?

First of all if the average EPS is 38 cents per share by the end of this year we would be talking about a  12 EPS of $1.52.

That seems fantasy when Analysts are currently expecting 2010 EPS of $1.01 for FORD.

But....  My 38 cents EPS isn't entirely off the mark considering FORD has beaten the most optimistic analyst in the past 4 quarters by a range of 4 - 10 eps.

The most optimistic analyst according to SCOTTRADE CHARTS shows a Q1 eps of 37 cents.
A 4 cent beat on the high goes quite higher than my 38 cent expectation....it is 41 eps.

Ford beats by 4 eps from the high estimate and that means the average 38 eps quarter to quarter or a $1.52 becomes extremely likely from extremely unrealistic.

Because the next quarter's biggest optimist is marked at 35 eps on the high and this Q2 will include in JUNE the sale of FORD FIESTAs.  FIESTA goes into production in Mexico starting in MAY.  4 cent beat on the high is 39 eps.

So that's 1/2 of the year in which it is reasonable although optimistic as heck to expect FORD to produce earnings well above my 38 EPS per quarter average.

After that... It will be extremely tough for the staunchest pessimistic analyst to have a full year EPS expectation during Q3 all that much lower than $1.52.

This makes me excited to say... that even at $1.50..... shaving off 2 cents...

FORD at 10 P/E  should be a $15.00 stock.     With the excitement surrounding FORD FIESTA in full effect this coming THIRD Quarter...  FORD trading anywhere below $15.00 a share would be an extremely good time to buy.

So...  If that's the case and today we have FORD at a 12 handle....  How is FORD...fairly priced today?  Much less overpriced?    FORD at 12 is well underpriced....

3 Comments – Post Your Own

#1) On April 11, 2010 at 3:50 PM, Varchild2008 (84.60) wrote:

Also note that everyone on Motley Fool sees FORD around 9 Times earnings priced.

Analysts on average see it close to 13 times earnings with their $1.01 prediction.

That is a gigantic Gulf between Motley sentiment versus analyst sentiment on Ford.

I can see FORD going to $20.00 a share before the end of THIS YEAR if my assumption that investors will want to close this GAP happens....

Once FORD starts to show their balance sheet numbers looking closer to the 9 times earnings view....by producing $1.50 eps this year.....  Then we could see the share price surge 7-8 bucks from where it trades at today.

Here's how it goes past $15 to an amazing $20....

What P/E is $20 if EPS is $1.50?  =  just over 13 times earnings.  

Considering that shares have reached past $14.00 in Q1.... Going as high as 13 and a half times earnings before the end of this year at an EPS $1.50 and you definitely will see $20.00 a share strike.


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#2) On April 12, 2010 at 12:14 AM, TMFUltraLong (99.95) wrote:

Ford Fiesta and excitement are two things that simply cannot be said in the same sentence.

Valuing Ford depends how you value 100 billion dollars in net debt.....

UltraLong

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#3) On April 12, 2010 at 8:06 AM, Varchild2008 (84.60) wrote:

FORD does not have 100 billion net dollars in net debt netted wise.  Not when you factor in the nearly 30 billion in cash that WAS THE DEBT....that has never been spent.....

And not when you factor in the profit made in Q1 that would add to the Cash.

And not when you factor in FORD Credit  TALF activities....BOND sale just recently occured at just over 7% yield... Their lowest yield sale yet.....indicating that corporate bond buyers are valuing FORD's debt more favorably than you are.

And not when you factor in the nearly 2 billion dollars in cash & senior notes that FORD received from sale of VOLVO.

And not when you factor in the value of not just the FORD FIESTA nameplate but now the announced new nameplates being built in Europe.....  These nameplates just like VOLVO each have their own respective asset value that SHOULD be factored into any debt evaluation.

Simply saying.... Look!!!  FORD has a debt of X dollars....  Is meaningless from a stock analyst perspective and does nothing to determine what is or is not Fair Market Value of a Company's stock price & market cap.

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