Is Ford a Buy After its Record Quarter?

E = Debt to Equity Ratio is Close to Zero

Ford’s debt-to-equity ratio of 5.86 looks pretty weak when compared to major competitors. General Motors (NYSE:GM) has a debt-to-equity ratio of just 0.36, while Toyota clocks in at 1.12.

Ford’s debt position could clearly be better with $24.1 billion in cash and $100.97 billion in debt. General Motors has $32.92 billion in cash, and $16.65 billion in debt, while Toyota has $38.94 billion in cash, and $148.99 billion in debt.

T = Technicals on the Stock Chart are Weaker than Preferred

As of November 20, the stock price is 1.09 percent above its 20-day simple moving average, or SMA; 4.56 percent above its 50-day SMA; and 2.07 percent above its 200-day SMA.

Since the beginning of 2012, the stock price has been in a downward trend, losing 1.89 percent this year to date, but gaining 8.66 percent year over year.

E = Earnings Are Increasing Quarter over Quarter

Ford’s revenue took a beating during the financial crisis but has shown strength since 2009. Revenue grew 9 percent in 2010, but growth slowed to 5.67 percent in 2011. Earnings have shown incredibly strong growth since the crisis, climbing 197 percent in 2011 as a result of Ford’s tough restructuring.

Full-year 2012 earnings estimates average $1.49 per share, a substantial drop from 2011, but reflective of deep restructuring and losses in the European market.

Quarterly earnings growth is shaky, alternating gains and losses between 2.3 and 6.1 percent over the last four quarters. Fourth-quarter earnings estimates of $0.25 per share will continue the trend if proven true. While Ford has beaten estimates for the last three quarters it will need to out-shine predictions by 64 percent in order to log two consecutive quarters of earnings growth.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.