Wall Street on GM and Ford
According to recent data by Reuters, only 19% of the analysts covering Ford (F) stock have given it a “buy” rating. By comparison, 57% of the analysts covering GM stock have given it a “buy” rating.
The ratings were based on the consensus of 21 analysts covering both GM and Ford as of October 2.
About 71% of those analysts recommend a “hold” for Ford, and 38% recommend a “hold” for GM. The remaining 10% recommend a “sell” for Ford, and 5% rate General Motors a “sell.”
GM has a higher upside potential
As of October 2, Wall Street analysts’ 12-month consensus target price for Ford is $10.68. That’s a 16% upside potential from its market price of $9.20. Analysts’ consensus target price for GM stock is $45.63, which is 37% higher than its market price of $33.30.
In the last three months, analysts’ consensus target price for GM has gone down from $49.39 to 45.63. More analysts have been positive on GM than Ford in the last few months.
In the past month, Ford stock has fallen 3%, while GM stock has fallen 6.6% as of October 2. In the past month, the stocks of automakers (XLY) Fiat Chrysler (FCAU) and Ferrari (RACE) have risen 4.5% and 4.9%, respectively.
Analysts like GM
Despite disappointing third-quarter data, GM’s US sales growth rate so far in 2018 has been better than Ford’s. In addition, GM’s profit margins are better than Ford’s, partly due to its stronger focus on retail segment sales. In the second quarter, GM and Ford reported adjusted net profit margins of 7.1% and 3.1%, respectively.
GM has accelerated its autonomous vehicle and electric vehicle development programs in the last couple of years, which could give it an edge over the competition.
In the next part, we’ll compare US auto companies’ valuation multiples.