Should you buy Ford as Jim Cramer recommends?

Ford_balance_sheet_2006-2010

Jim Cramer was promoting Ford (F) on his Mad Money show tonight.  The Ford CEO has flowery things to say.  His company doesn't know how to make money.  Here is a quick valuation of Ford for those curious investors that are considering the non-dividend paying Ford.
 
Ford (F)
Market price: $13.95
Shares: 4.178 billion (diluted in 2010)
 
Dividend record
Dividend: none since 2006
Dividend yield: n/a
 
Earning power
5 yr average earnings: ($1.00)
10 yr average earnings: ($0.51)
Earnings are adjusted for changes in capitalization; Ford has been issuing shares for the last five years
          EPS      Net inc.         Adj. EPS
2006   ($6.72)   ($12,629 M)   ($3.02)
2007   ($1.38)   ($2,723 M)     ($0.65)
2008   ($6.50)   ($14,766 M)   ($3.53)
2009   $0.86     $2,717 M       $0.65
2010   $1.66     $6,561 M       $1.57
 
Ford has no proven earning power even when going back 10 years.
 
Balance sheet: declining assets, declining liabilities, and a slightly negative shareholder equity
Book value per share: ($0.16)
Price to book value per share: n/a because it is a negative number
Current ratio: 2.17 (over 2.0 is good)
Quick ratio: 2.07 (over 1.0 is good)
 
Conclusion: Ford pays no dividend and it is speculatively priced.  Don't buy Ford.  There are many better high dividend stocks like Safe Bulkers (SB).
 
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Published in: on June 7, 2011 at 9:53 pm  Leave a Comment  

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