Are Shares Of Ford Setting Up For A Big Fall Sooner Than Later?

Ford Motor Company F have been back in bearish mode after staging an upside try from October of 2014 to March of this year. The downside that has occurred since the March peak at just under $17 may just be the beginning, though, as the technical crowd is pointing to a possible drop to the mid-$12s before the selling is all done. Can the company's management unleash some unexpected tricks that will boost the revenue and profit picture for Ford – as well as the stock price? Here's a look at the fundamentals and technicals for Ford to see where things may be headed for shareholders: What the bulls see in Ford Some very cheap valuation metrics:

• $163.78 billion in enterprise value versus only a $59.87 billion market capitalization
• A price-to-sales of only 0.43
• A price-to-book of only 2.43
• A PE ratio of around 8.5 versus estimated EPS growth of 18.2% for the next year
• 11.96% return on equity
• A current ratio of 1.76
• An annual dividend yield of 3.9%

What the bears see in Ford

• Only 2.2% net profit margins that actually produce negative levered free cash flows of $2.83 billion annually
• Estimated revenue growth of only 5.5%
• A return on assets of only just over 1%

Troublesome balance sheet metrics:

• $19.54 billion in cash versus $122.78 billion in total debt
• A debt-to-equity ratio of 489.87%

The technical take on Ford shares Ford shares appear to the technical crowd to be destined for lower prices – in the mid $12s by many estimates. The question is whether the issue will fall straight down to that level or if shares will bounce first. The technicians note that a bounce up to $16.06 may occur in the short-term. Afterward, though, the anticipated drop to the mid-$12's may play out. Overall Ford may be a very attractive buy candidate if the stock drops as the technicians anticipate it will. The valuations will be more attractive at that point on top of the likely very attractive technical set-up. What will cause such a decline in the stock price is still in question. Recent car sales data came out well ahead of expectations. So, either that data will be reversed in the next report or some company specific news may pop up and hurt the shares. Stay tuned to this story as Ford shares will likely move violently in either direction in the coming months.