Ford is a risky bet and not just because of the UAW strike: Gina Sanchez

Gina Sanchez continues to recommend “caution” on Ford Motor Co (NYSE: F) even though it has already lost more than 20% over the past three months.

Why is Sanchez not interested in Ford stock?

Interestingly, reasons why she’s dovish on the legacy automaker go well beyond the ongoing strike.

The Chief Market Strategist of Lido Advisors is not interested in owning Ford Motor primarily because it has a lot of debt coming due. Speaking with CNBC today, she said:

Ford had to take on quite a bit of debt during the pandemic. A third of that is coming due in the next twelve months. That’s a big hunk of debt to have to refinance at significantly different rates.

Also on Wednesday, Ford said strong demand for its traditional pickup trucks resulted a 7.7% annualised growth in its U.S. sales in the third quarter.

Ford will have to spend a lot on interest payment

Sanchez would rather avoid Ford Motor because it will have to pay a huge sum of interest on the said debt as rates are currently unusually high. So, its profitability may be affected.

On top of that, thousands of its workers are currently on strike, demanding higher pay and better benefits which could further increase its costs. Just last week, Shawn Fain – the President of United Auto Workers accused Ford CEO Jim Farley of “lying about the state of negotiations”.

The Detroit carmaker is slated to report its Q3 results in the final week of October. Consensus is for it to earn 40 cents a share this quarter versus 30 cents per share a year ago.

Wall Street currently has a consensus “overweight” rating on Ford stock.