Shares of Ford Motor shot up to $14.03 during today's morning trading session -- an increase of 4.2% that brings the stock 11.53% over its average analyst target price of $12.58. This may imply limited upside for the Auto Manufacturers stock, whose analysts give it a consensus rating of hold, and target prices spanning from $9.16 to $19.23 dollars per share.
The market sentiment on the stock is decidedly optimistic, since Ford Motor has a short interest of only 3.1%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Ford Motor is to look at the percentage of institutions that are invested in the stock. In this case, 57.8% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
In conclusion, we see negative market sentiment regarding Ford Motor because of an analyst belief that shares are overpriced, a hold rating, an average amount of shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about F:
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The stock has trailing 12 month earnings per share (EPS) of $0.97
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Ford Motor has a trailing 12 month Price to Earnings (P/E) ratio of 14.5 compared to the S&P 500 average of 27.65
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The company has a Price to Book (P/B) ratio of 1.31 in contrast to the S&P 500's average ratio of 4.59
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Ford Motor is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.06 and 3.18 respectively
