Is September a good month for buying Ford shares?

By:
on Sep 6, 2021
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  • Ford reported that total retail sales in the U.S. fell more than 39% in August
  • Ford will scale back production of the F-150 pickup because of the ongoing semiconductor shortage
  • Probably it is not the best moment to buy Ford shares

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Ford Motor (NYSE: F) shares have weakened from $16.45 to $12.38 since the beginning of June 2021, and the current price stands around $12.8. Ford reported better than expected second-quarter earnings results in July, but the company announced last Thursday that retail sales in the U.S. fell more than 39% in August.

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Fundamental analysis: Ford reported that total retail sales in the U.S. fell more than 39% in August

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Ford Motor shares remain under pressure after the company reported that a total U.S. sales fell to 124,176 vehicles in August. Car sales fell 86% Y/Y to 2,369 units; truck sales fell 29.4% Y/Y to 73,610 units, while the sales of SUVs weakened by 25.3% Y/Y to 48,197 units.

Total retail sales for August in the U.S. fell 39.6%; still, the positive news is that Ford’s electrified vehicle sales were up 67.3% on sales of 8,756 vehicles. The company’s management expects some headwinds in the third quarter as commodity prices continue to rise, and the management expects second-half commodity expense to be higher than the first half of the year.

The negative news is that Ford will scale back production of the F-150 pickup, ​some of its largest, most-profitable models, because of the ongoing semiconductor shortage. Ford has already lost roughly half of its planned production in its second quarter due to the semiconductor chip shortage, and the consulting firm AlixPartners estimates, the deficit will lower automotive industry revenues by $110 billion.

On the other side, the battle against the coronavirus is still not over, and the global recovery could be hit by the fast-spreading Delta variant of the coronavirus, which could trigger new lockdowns. This is very dangerous for the automotive industry because this industry has been affected significantly by the pandemic, and many automobile companies have seen revenues drop by double digits.

Fundamentally looking, Ford trades at less than five times TTM EBITDA, and with a market capitalization of $51.4 billion, shares of this company are fairly valued. Technically looking, Ford shares could fall even more in the upcoming weeks, the automotive industry has demand and supply concerns, and probably it is not the best moment to buy Ford shares.

Technical analysis: Ford shares have weakened more than 20% from their recent highs

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Data source: tradingview.com

Ford shares have weakened more than 20% from their recent highs registered in June, and if the price falls below $12 support, it would be a strong “sell” signal. On the other side, if the price jumps above $14, it would be a signal to buy shares, and the next target could be around $15.

Summary

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Ford Motor shares remain under pressure after the company reported that total retail sales in the U.S. fell more than 39% in August. Probably it is not the best moment to buy Ford shares, and if the price falls below $12 support, it would be a strong “sell” signal.

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