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Ford downgraded by Moodys

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To be expected until Ford turns a corner and ratings agencies see results.

Hopefully, all of Hackett's behind the scenes work will start baring fruit next year.

 

At $9.00, Ford stock  might be undervalued especially if it jumps back to $18.00 next year or so

on the back of some  impressive turnarounds in losses abroad and new products  in North America.

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This seems to be a case of Moody's following the market rather than leading it. Ford debt is currently priced in the market as non-investment grade (Wall Street remains confused and uncertain about Ford's future). But should it be? That is what the rating agencies should be looking at.

 

The two other agencies, S&P and Fitch, still rate Ford debt two notches higher, as low investment grade. This should be, for now, enough for Ford debt to hold onto institutional investors.

 

There are curious things about placing junk status to Ford debt. Yes, the company is undergoing a tough and costly transition they should have started a few years earlier. But there are early positive signs about the transition and the company is profitable with much more cash than debt. Maybe the oddest thing about the downgrade is that Moody's did it out of the blue without the usual months (or more) process of having it on watch or otherwise indicating that a downgrade is in the works unless there were certain kinds of improvements. 

 

And here I've been kicking myself that I missed another opportunity to pick up more Ford stock when it was briefly back in the mid 8s recently with dividends above 7%. Looks like that buying opportunity (or better) will be back again for a while. ;)

Edited by Gurgeh

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2 hours ago, jpd80 said:

To be expected until Ford turns a corner and ratings agencies see results.

Hopefully, all of Hackett's behind the scenes work will start baring fruit next year.

 

Well said jpd80. Hackett's plan for fitness and addressing Ford's endemic operational problems will be a long process. There's just a lot to fix.

 

The automotive industry downturn occurring now makes things harder. And the transformation of the industry to electric & autonomous vehicles and mobility services harder still. But I'm still optimistic that Hackett will pull it off. Despite the bond rating downgrade, I'm more confident now than when Hackett first became CEO that Ford will survive and maybe even thrive 10 years from now.

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14 minutes ago, theoldwizard said:

Bih Jim's plan is to "cut your way to profitability".

 

No it's not.  He's not cutting R&D or product development.   He's bringing out a whole bunch of new vehicles including BEVs and hybrids.  Explorer and Aviator are the best they've ever been - Aviator by a large margin.   He just shifted spending and resources.   Wall Street is unimpressed because they have the attention span of a flea and they can't see (or don't care about) the long term picture.   They only think short term which is why Ford shouldn't pay attention to them.

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The maddening part is that Wall street sees nothing yet because it's all just expense on the ledger

but the moment Ford drops a ton of new products and upgrades F Series, all  will be forgiven and

ratings will rise.

 

 

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3 minutes ago, akirby said:

 

No it's not.  He's not cutting R&D or product development.   He's bringing out a whole bunch of new vehicles including BEVs and hybrids.  Explorer and Aviator are the best they've ever been - Aviator by a large margin.   He just shifted spending and resources.   Wall Street is unimpressed because they have the attention span of a flea and they can't see (or don't care about) the long term picture.   They only think short term which is why Ford shouldn't pay attention to them.

 

Good points akirby sir. Ford has to pay attention to Wall Street as long as it's a publicly traded company. And to bond rating agencies as long as it issues debt. That's what makes things so challenging for Hackett. On the one hand, his fitness initiatives are long and drawn out. On the other, investors, analysts, and bond ratings agencies rightfully expect that those initiatives show results sooner rather than later.

 

Everyone, probably including Jim Hackett himself, would like to see Ford become fit faster. But operational problems at Ford are so deeply entrenched that I don't think it's humanly possible to fix Ford much faster than what's happening already.

 

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11 minutes ago, jpd80 said:

The maddening part is that Wall street sees nothing yet because it's all just expense on the ledger

but the moment Ford drops a ton of new products and upgrades F Series, all  will be forgiven and

ratings will rise.

 

But that is maddening because a good analyst WOULD be able to look at the future investments and read between the lines and see where the company is headed.

 

But instead they read GM press releases touting future things that never meet expectations and take them as gospel and proof that GM is in a better position than Ford which is ridiculous.

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22 minutes ago, akirby said:

 

But that is maddening because a good analyst WOULD be able to look at the future investments and read between the lines and see where the company is headed.

 

But instead they read GM press releases touting future things that never meet expectations and take them as gospel and proof that GM is in a better position than Ford which is ridiculous.

 

Thats been the way the IT industry has been working for almost 20 years-Just look at Apple, Nvidia, Cisco, etc The newest product is the latest and greatest thing and just a minor speed bump that doesn't really offer anything "new" to its users- its finally gotten to the point that people don't see the value in upgrading every 2 years or so. 

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You have to love how they do this just as the product they've been complaining Ford doesn't have is starting to arrive.  They've been in the product doldrums the last few years, and now we have critical products arriving to really turn things around - Explorer/Aviator arriving now, Escape/Corsair arriving soon, F-series, Bronco, baby Bronco, Mach E next year, etc. etc.

Edited by rmc523

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7 hours ago, akirby said:

 

But that is maddening because a good analyst WOULD be able to look at the future investments and read between the lines and see where the company is headed.

If it was only one ratings company, we could write it off as just one analyst's view but,

Morgan Stanley, Moodys, Standards and Poor all have this negative, bleak view of Ford.

 

Most on BON would be aware of the massive changes happening in Ford and all the new

products coming but unfortunately, Ford has failed to effectively articulate that message

to the ratings companies, when I see Jim Hackett , Jim Farley or even Hau Tal Tang hold

back on details or products which would be a light bulb moment, i just shake my head...

two years on and they still cannot explain or show what a white vehicle is or will be.

The unwillingness to fully explain the plan in detail  a giant red flag for many analysts.

 

Quote

 But instead they read GM press releases touting future things that never meet expectations and take them as gospel and proof that GM is in a better position than Ford which is ridiculous.

Look at how quickly GM moved transitioning from cars to Utilities coming out of Mexico,

GM basically started a year after Ford and completed that now, a year ahead of Ford..

 

Even with all of GM's foibles and missteps, it's still a giant license to print money so even

if they get the basic things right, there's usually enough sales momentum to really make 

some big profits, cutting four car plants, two parts plants and effectivly replacing all of

that production with Utilities coming out of Mexican plants was a watershed moment,

one that analysts could see  and factor in on their outlook of GM

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5 minutes ago, twintornados said:

Ford could invent cold fusion and Wall Street would be all "meh" since the Ford Family exclusively owns the only stock that matters...and Wall Street cant profit from it...

This is part of it, Ford has made it abundantly clear to Wall Street that the influence

that ratings companies have on Ford is much less than say, GM or most other publicly

traded companies.  It's like Ford wants to be "loved" by wall street but not influenced.

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and when results start turning around analysts will then gush with praise for Ford executing a magnificent recovery

 

Edited by jpd80

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May be if they can figure out how to put "fun" back in a vehicle they would have a chance...its all pretty much coming down to bronco and f series...question is where do you cut??? And what do you keep????. And who do we align with????...kinda surprised ranger has not been pushed back until mid 20's...

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1 hour ago, snooter said:

May be if they can figure out how to put "fun" back in a vehicle they would have a chance...its all pretty much coming down to bronco and f series...question is where do you cut??? And what do you keep????. And who do we align with????...kinda surprised ranger has not been pushed back until mid 20's...

 

Fun doesn’t pay the bills.

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1 hour ago, akirby said:

 

Fun doesn’t pay the bills.

What there doing now is not working...you have more than enuff data to look over and figure that out on your own....you cant wish this away..we need product that "connects"...may be hire some toyota people..they can sell a pos taco on the merits of the lifestyle to people who think its the best when in reality its the polar opposite....how the hell they can stack frames behind the dealership and no buyer even askes why is pure marketing....thats where we need to get to

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9 hours ago, snooter said:

What there doing now is not working...you have more than enuff data to look over and figure that out on your own....you cant wish this away..

 

You must be looking at different data or you just don't understand it.

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I agree fun should be figured out for FORD, and fun does pay bills.Look at fiat Chrysler. Fatcat Motors in almost everything. You can't say that the chargers aren't selling. Hell, the tugboat challenger outsold the Crapmaro. Those srt trucks are selling. There is no reason FORD can't do a four door performance car, and more performance vehicles 

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22 minutes ago, mustang let back said:

 There is no reason FORD can't do a four door performance car, and more performance vehicles 

 

Hmm

Edge ST

Explorer ST

Lincoln Aviator Hybrid....

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58 minutes ago, silvrsvt said:

 

Hmm

Edge ST

Explorer ST

Lincoln Aviator Hybrid....

 

Exactly.  I bet Edge ST outsold the old Fusion Sport 4:1 if not more.

 

Could they do a CD6 sports sedan?  Sure - but it would only make sense if it was shared with Lincoln and they had extra factory capacity lying around.  As a stand alone project it would never fly.

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