Last year, auto sales suffered from inflation and supply chain disruptions. However, the auto industry is anticipated to recover this year due to declining inflation and smoother supply chains. Considering this, let’s look at the fundamentals of Ford Motor Company (F) and Mullen Automotive, Inc. (MULN).
In August, U.S. new vehicle sales reached 1,341,169 units, a 16.2% increase from August 2022 and a 2.0% rise from July 2023, when supply chains were limiting production.
Additionally, the worldwide automotive market is projected to reach $6.07 trillion by 2030, with a 6.9% CAGR. This growth is driven by factors such as increasing customer interest in electric vehicles and advancements in autonomous driving technology.
Notably, the Electric Vehicle (EV) market is set to thrive thanks to government subsidies, stricter emission regulations, a growing public charging network, and cost reductions.
Considering these conducive trends, let’s take a look at the fundamentals of the above-mentioned Auto & Vehicle Manufacturers stocks.
Stock to Avoid:
Mullen Automotive, Inc. (MULN)
MULN manufactures and distributes electric vehicles. Its products include passenger electric vehicles and commercial vehicles and provide solid-state polymer battery technology.
MULN’s trailing-12-month asset turnover ratio is 99.9% lower than the 1x industry average.
MULN’s revenues for the third quarter that ended June 30, 2023, came in at $308 thousand. However, its loss from operations widened 195.3% year-over-year to $53.81 million.
The company’s net loss attributable to stockholders decreased considerably year-over-year to $308.86 million, and its net loss per share came in at $11.14, representing a decrease of 161.5% over the prior-year quarter.
Over the past nine months, MULN’s stock has declined 99.7% to close the last trading session at $0.30.
MULN’s POWR Ratings reflect its bleak outlook. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting.
It has an F grade for Stability and Quality and a D for Sentiment. It is ranked #44 out of 52 stocks in the B-rated Auto & Vehicle Manufacturers industry. Beyond what we stated above, we also have given MULN grades for Growth, Value, and Momentum. Get all MULN ratings here.
Stock to Watch:
Ford Motor Company (F)
F develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments.
On October 25, 2023, F announced a tentative labor contract agreement with the UAW, covering the U.S. operations. This agreement aims to restart several manufacturing plants and call back 20,000 employees. It is now subject to ratification by F’s UAW-represented employees.
On October 18, 2023, F announced the final step in a series of organizational changes for its Ford+ growth plan, establishing a global industrial system to support all F’s vehicles – gas, hybrid, and electric. This move aims to streamline operations, enhance customer experiences, and optimize quality while reducing costs and complexity.
F’s CEO Jim Farley emphasized that these changes will unlock the growth and value-creation potential of Ford+. This follows the launch of the Ford+ plan, the creation of customer-centered global automotive businesses, the deployment of a new operating system, and the initiation of F’s Integrated Services.
In terms of the trailing-12-month Capex/Sales, F’s 4.60% is 41% higher than the 3.26% industry average. Its 14.27% trailing-12-month Return on Common Equity is 25.1% higher than the 11.40% industry average. However, the stock’s 10.4% trailing-12-month gross profit margin is 70.8% lower than the 35.69% industry average.
F’s total revenues for the third quarter ended September 30, 2023, increased 11.2% year-over-year to $43.80 billion. Its adjusted net income increased 27.4% year-over-year to $1.34 billion. Its adjusted EBIT rose 21.9% year-over-year to $2.20 billion. The company’s adjusted EPS came in at $0.39, representing an increase of 30% year-over-year.
On the other hand, its total liabilities equity came in at $268.07 billion, up 47.6% year-over-year to $2.46 billion as of December 31, 2022.
Street expects F’s EPS and revenue for the quarter ending December 31, 2023, to decrease 76.8% and 1.7% year-over-year to $0.12 and $41.06 billion, respectively. The stock has declined 8.4% year-to-date to close the last trading session at $10.14.
F’s POWR Ratings reflect uncertainty. It has an overall rating of C, which translates to a Neutral in our proprietary rating system.
It has a C grade for Growth, Momentum, Stability, and Quality. It is ranked #38 in the same industry. To see F’s ratings for Value and Sentiment, click here.
What To Do Next?
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F shares were trading at $10.56 per share on Friday afternoon, up $0.42 (+4.14%). Year-to-date, F has gained 0.33%, versus a 15.12% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments. More…
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