PreMarket Prep Stock Of The Day: Ford Motor Company

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

The COVID-19 crisis has instigated over a month of extreme volatility, during which the markets plunged from their all-time-high before staging a massive rebound. During that time period, the focus was on news concerning the pandemic — and not about analyst ratings and earnings. 

That dynamic has changed dramatically. With JPMorgan Chase & Co. JPM kicking off first-quarter earnings season Tuesday morning, the true fundamentals of a company will now be of utmost importance.

Some companies have offered preliminary guidance ahead of their first-quarter reports, and one of them is the PreMarket Prep Stock of the Day: Ford Motor Company F.

Ford In The Long-Term: The Trend Has Not Been Your Friend

When Ford was bottoming out in November 2008 at 88 cents per share, at least one dealership ran a promotion of giving away shares of the $1 stock with every new car purchase. If any investor took advantage of that opportunity, they had the opportunity to exit the issue near $19 in January 2011.

If that same investor held on to the issue during the greatest bull market of all time and exited today, they would cash out for $5. Of course, that would still equate to 400%  return over that time period. The problem: not many Ford investors have a $1 cost basis in the issue.

For a better idea of Ford's relative performance, consider this: Ford ended April 2000 at $31.03. 

Ford Price Action In 2020

After hitting its January high of $9.42, Ford's share price underwent the price equivalent of a 2-for-1 stock split, bottoming at $3.96 in March. 

In April, Ford stock has rebounded as high as $5.75. The stock has now fallen back to the $5 area and was trading down 4.28% at $5.14 at the time of publication Monday. 

Ford Issues Weak Q1 Guidance Ahead Of Report 

With its factories shuttered for a good portion of the quarter and others that were open producing ventilators, it is no surprise that Dearborn issued weak first-quarter guidance ahead of Monday's opening bell. 

Although the sales guidance is better than expected, at $34-billion vs. a $32.2-billion Street estimate, Ford forecast vehicle wholesales at down 21% year-over-year. The automaker guided for adjusted EBITA of negative $600 million. 

Perhaps the most alarming information released Monday was Ford's statement that its present cash is sufficient through at least the end of the third quarter. Yikes. 

Ford Moving Forward

With no way determine when the company will be back to its full operations, it's hard to have a bullish outlook on Ford. And consider this: how many people will head out to buy a new car once they're allowed to leave their house again? 

With U.S. and worldwide unemployment poised to skyrocket further in the next few months, new car purchases are not going to be a top consumer priority.

Ford did not have to bailed out by the federal government during the financial crisis, unlike General Motors Company GM — but this pandemic could prove to be just as severe of a financial challenge for automakers as the darkest days of the Great Recession.

Ford Executive Chairman Bill Ford. Benzinga file photo by Dustin Blitchok.