VOLKSWAGEN AG/ADR (OTCMKTS:VWAGY) and Ford Motor (OTCMKTS:F) Critical Analysis

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VOLKSWAGEN AG/ADR (OTCMKTS:VWAGY) and Ford Motor (NYSE:F) are both large-cap auto/tires/trucks companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Dividends

VOLKSWAGEN AG/ADR pays an annual dividend of $0.34 per share and has a dividend yield of 1.8%. Ford Motor pays an annual dividend of $0.60 per share and has a dividend yield of 6.6%. VOLKSWAGEN AG/ADR pays out 12.2% of its earnings in the form of a dividend. Ford Motor pays out 46.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares VOLKSWAGEN AG/ADR and Ford Motor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
VOLKSWAGEN AG/ADR 4.85% 9.88% 2.52%
Ford Motor 1.37% 14.92% 2.08%

Earnings and Valuation

This table compares VOLKSWAGEN AG/ADR and Ford Motor’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
VOLKSWAGEN AG/ADR $278.54 billion 0.34 $14.33 billion $2.78 6.76
Ford Motor $160.34 billion 0.23 $3.68 billion $1.30 6.98

VOLKSWAGEN AG/ADR has higher revenue and earnings than Ford Motor. VOLKSWAGEN AG/ADR is trading at a lower price-to-earnings ratio than Ford Motor, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

VOLKSWAGEN AG/ADR has a beta of 1.95, suggesting that its share price is 95% more volatile than the S&P 500. Comparatively, Ford Motor has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for VOLKSWAGEN AG/ADR and Ford Motor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
VOLKSWAGEN AG/ADR 1 1 3 0 2.40
Ford Motor 3 5 6 0 2.21

Ford Motor has a consensus target price of $10.16, indicating a potential upside of 12.05%. Given Ford Motor’s higher probable upside, analysts plainly believe Ford Motor is more favorable than VOLKSWAGEN AG/ADR.

Insider and Institutional Ownership

0.1% of VOLKSWAGEN AG/ADR shares are held by institutional investors. Comparatively, 53.8% of Ford Motor shares are held by institutional investors. 0.8% of Ford Motor shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

VOLKSWAGEN AG/ADR beats Ford Motor on 9 of the 16 factors compared between the two stocks.

About Ford Motor

Ford Motor Company designs, manufactures, markets, and services a range of Ford cars, trucks, sport utility vehicles, and electrified vehicles worldwide. It operates through three segments: Automotive, Mobility, and Ford Credit. The Automotive segment sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to commercial fleet customers, daily rental car companies, and governments. The Mobility segment designs and builds mobility services; and provides self-driving systems development and vehicle integration, autonomous vehicle research and engineering, and autonomous vehicle transportation-as-a-service network development services. The Ford Credit segment primarily engages in vehicle-related financing and leasing activities to and through automotive dealers. It provides retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, such as leasing companies, government entities, daily rental companies, and fleet customers. This segment also offers wholesale loans to dealers to finance the purchase of vehicle inventory; and loans to dealers to finance working capital and enhance dealership facilities, purchase dealership real estate, and other dealer vehicle programs. Ford Motor Company was founded in 1903 and is based in Dearborn, Michigan.

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