Do It Yourself Stock Investor

The Swift FCF Yield: Ford Motor Company

Q1 2017

Ford Motor Company FCF Yield and Trump

President Donald Trump (Friday, January 20th) has been loud and clear that the auto industry must keep domestic production and jobs a priority. Does this make for a Trump n Dump, perhaps even a flat out squash on margins? It seems the market is undecided with no large moves in price per share (PPS) at this time.

Love CEO interviews? Read and listen to, "Interview: Veru Healthcare CEO Dr. Mitchell Steiner."

On January 11th, via The Street, Jim Cramer was cautious on auto manufacturers. He mentioned a decline in trends due to Uber, although not his main concern. Despite caution his one positive note for General Motors Company (NYSE: GM) was cash flow. Watch the clip via Twitter:

.@JimCramer credits China as a factor in GM's success: $GM

— TheStreet (@TheStreet) January 11, 2017

Free Cash Flow (FCF) Yield

It becomes difficult to understand the context of such a statement or perhaps there is one aspect of cash flow that is promising? A quick look at General Motor's cash flow statement after Q3 shows they have: (1) a loss for investing activities, -$24b; (2) a loss for free cash flow, -$9.5b; and (3) a loss for total current assets after total current liabilities, -$6b. The company did have a positive cash flow from financing activities of $12b.

If an auto stock should be liked for the cash flow or better yet free cash flow (FCF) and FCF Yield, then the better choice would be Ford Motor Company (NYSE: F).

Shareholders of Ford await the Q4 earnings release tentatively scheduled for January 26, 2017. Meanwhile, the company has started into the fiscal Q1 of the new year.

Find sales on Ford parts: Wheels, Tires and Accessories - JC Whitney

The FCF Yield for Ford Motor Company at the end of 9mo 2016 is 24.15% in relation to its Market Capitalization. The company created $16,994m in Operating Cash Flow with a minimal Capital Expenditure of ($4,912m). This positive cash flow will support their quarterly dividend and their supplement dividend of $0.05/share.

Ford Motor Company and General Motors FCF Yield Chart

Free Cash Flow is tabulated by taking the value of the company's operating cash flow and subtracting from it the value of capital expenses. The yield is then formulated by dividing the result by either the market capital or enterprise value.


Disclosure: I am/we are long F.

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image source: derivative of "Donald Trump" by Gage Skidmore (CC BY-SA 4.0) with a FinViz graph.