Ford Motor Co. (F) is a global automobile manufacturer, selling vehicles under the Ford and Lincoln brands. 75% of the company's operating profits come from sales of vehicles, parts, and accessories. At 5.4 million vehicles sold worldwide in 2019, Ford ranks as the 6th largest automaker in the world, and the second-largest in the U.S. behind General Motors. Ford Credit accounts for the remainder of profits, collecting financing rates and fees for about 45% of retail unit sales and 80% of sales to dealers. Ford's largest geography is the U.S. (2.6 million units), followed by Europe (1.6 million), and China (1.2 million).

Does The Company Have Recurring And/Or Rising Revenues?

NO. The vast majority of Ford's sales and profits are from new vehicle deliveries, which are transactional, non-recurring sources. Growth has been poor as well, with a 3-year annual revenue growth rate of just 0.9%. Worse, Ford's unit sales have been tumbling, down to 5.4 million in 2019 vs. 6.6 million in 2017, and market share has fallen precipitously in all 3 of its major geographies. The worldwide automobile market is largely developed, generating a 3% compound annual growth rate over the past decade, just over the rate of inflation. We don't see substantial revenue growth opportunities going forward.

Does The Company Have Durable Competitive Advantages?

NO. Automobiles are a difficult business, with high capital costs, cyclical and economically sensitive demand, regular labor disputes, and few opportunities for durable competitive advantages. Ford's only brand advantage is in light trucks, where its F-series consistently outsells the competition from Ram and GM, but this is a limited market in the U.S. only. Ford also suffers from a highly unionized workforce, against some foreign competition that manufacture free of unions. New competitors continue to enter the market, both domestically and abroad, and the shift to electric creates more opportunity to disrupt established players like Ford. This is a clear "no moat" situation.

GreenDot Rating: RED

The auto industry is extremely hard. It requires a unique situation to get out of a RED (unattractive) business model rating, and we don't see anything particularly special about Ford. There's almost nothing attractive about the business from a long-term standpoint. The company is constantly going through boom-and-restructure cycles and is always at risk of financial failure when major economic headwinds hit. This is one to stay away from.