Is Ford Stock a Buy Now?

Nology companies seem to get all the attention these days

But it's best not to forget well-known es in other industries that are also important to the economy

But is Ford stock a buy now

Investors will be able to make a better decision after assessing both the bull and bear cases

Image source: Getty Images

Driving greater recurring revenue One of the biggest critiques of in car companies is that they don't lend themselves to repeat purchase behavior from consumers

That's the case with an expensive item

This is in stark contrast to es that sell ducts and services that are low-cost and bought at frequent intervals

Consequently, Ford could experience lumpy demand

Management is aiming to change things

Its Ford segment, which sells vehicles, software, and services to commercial and government clients, is a bright spot

Ford had 675,000 subscriptions as of March 31, a figure that soared 20% year over year. "Ford Intelligence continues to drive recurring high margin, non-cyclical revenue," CFO Sherry House said on the fourth-quarter 2024 earnings call

Ford Intelligence is a cloud platform that allows customers to manage their vehicles

The dividend is an obvious reason why investors would want to buy Ford s

Of course, this also implies that the stock is cheap

As of June 25, s trade at a price-to-earnings ratio of 8

Ford is cheap for a reason I believe that a good starting point to find winning stocks is to look at companies whose s have performed well in the past

Unfortunately, Ford doesn't fit the bill

I'm not very confident that this trend will change

Ford isn't going to register meaningful growth

The automotive industry is very mature, with unit sales not really budging by much

That doesn't create a favorable backdrop for Ford to expand its

The company's dividend is currently high, but it might not be sustainable

That's because Ford operates with extremely thin margins. 7 billion in revenue in Q1, it reported just $1 billion in adjusted operating income

This vides almost no wiggle room

That's a scary position

Consumers will delay buying new cars if they are worried the economy

This can have a major impact on demand and sales

With falling revenue, management could pause the dividend altogether to conserve cash

Besides the economy, Ford must also navigate factors completely outside of its control

This has revealed itself this year, with the dynamic tariff situation forcing the leadership team to implement pricing discounts to drive demand

Running a complex supply chain makes things difficult

There are also labor disputes that can push costs higher over time

Unless Ford wants to risk a significant disruption to its operations, it must eventually play ball with its unionized work force

Ford might be an icon of the American economy

But this stock is not a smart investment for long-term investors looking to own high-quality es that can outperform the market

Neil Patel has no position in any of the stocks mentioned

The Motley Fool has no position in any of the stocks mentioned

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