Is Ford Pro Unit Doing the Heavy Lifting for the Company's Growth?
U.S. auto giant Ford Motor Company F runs three business segments — Ford Pro, Model e and Ford Blue. On its latest earnings release, Ford Pro clocked $1.3 billion EBIT. Ford Blue reported $96 million EBIT, a slump from the prior-year quarter's $901 million, losing significant momentum. The Model e segment could not break its streak of continuous losses. Thus, Ford Pro has proven to be the only competitive advantage in Ford's stride.
The Ford Pro segment offers products and services to its commercial customers, including small businesses, fleet operators and government agencies. The lineup of customer favourites, such as F-150, Transit Van, Super Duty, Maverick, makes it a strong product-driven segment. Ford also provides additional services like fleet management and financing options to its customers.
Ford Pro currently holds 40% market share in North America and aims to maintain EBIT margins in the mid-teens. The segment has around 675,000 paid software subscriptions, with strong ARPU growth driving incremental revenues. Software services also serve as a countercyclical measure for the segment. Ford Pro plans to emerge as a growth engine by accompanying traditional automotive services with software-defined vehicles and connected services to fleet customers.
The sustainable methods adopted in this segment, while also ensuring capital efficiency, have provided Ford with a firm foundation and improved capabilities. Its remaining segments now plan on following Ford Pro's footsteps to revive operations. As of now, Ford Pro remains a segment of high strategic importance.
The Zacks Rundown for Ford
Some other stocks in the Auto space are Tesla, Inc. TSLA and General Motors Company GM.
Shares of Ford have lost around 2% over the past year against the industry 's growth of 22.9%. Its peers, General Motors and Tesla, have gained 7.7% and 83.3%, respectively, over the same period.
From a valuation standpoint, F trades at a forward price-to-sales ratio of 0.26, below the industry average. It carries a Value Score of A. In comparison to this, General Motors and Tesla trade at 0.28 and 9.48, respectively, with a Value score of A and F.
Image Source: Zacks Investment Research
Take a look at how Ford's EPS estimates have been revised over the past 30 days.
Ford stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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