Ford Motors (NYSE: F) is trading at a P/E ratio of 9.29 which is low when compared to industry peers and also the S&P 500 index. However, investors need to look beyond the P/E ratio and we will carefully analyze the various parameters.

The company released its fourth-quarter and full-year 2018 results on January 23, 2019. Revenue grew 1% year-on-year to $41.8 billion in the 4Q 2018. For the full-year 2018 revenue grew 2% to $160.3 billion. Revenue growth has been slow at a CAGR of 2.3% from 2015-2018. This is one of the reasons for the stock to be cheap as investors are not happy with the growth rate. The maturing North American car industry is one of the reasons for the company’s slowing growth. However, the company has been seeing some turnaround with its new launches.

Margins have been coming down in the past few years. EBIT margin for the 4Q 2018 was 3.5% when compared to 4.9% for 4Q 2017. Operating adjusted cash flows were $1.5 billion which was higher compared to the 3Q 2018 figure of $0.1 billion and lower when compared to $2.2 billion for the 4Q 2017. Profits have been coming down due to slower sales, increasing commodity costs, and higher warranty costs.

The company’s balance sheet has been strong. Cash and cash equivalents at the end of 4Q 2018 was $23.1 billion and debt was $14.1 billion. Capital expenditure was $7.7 billion for 2018 when compared to $7.0 billion for 2017.

The dividend yield is 7.03% which is very good. So income investors would love to keep the stock as Ford has been paying a generous dividend in the past. There were some concerns with the investors whether Ford Motors will stop paying the dividend. However, with the stable cash flows and also to retain the long-term investors the company would continue paying the same.

The company has a history of beating earnings estimates. The company beat the revenue estimates in the past four quarters and missed the earnings estimates twice in the previous four quarters. The median analyst revenue estimate for the 1Q 2019 is $37.28 billion and earnings per share estimate is $1.22.

Product Portfolio of Ford Motors has been very good. F-Series which is one of the best-selling vehicles of the company has sold over 1 million globally in 2018. The company also launched a medium pickup Ranger in the US. The company will launch the all-powerful Shelby GT 500 in 2020. Currently, electric vehicles are getting a lot of attention from the consumers and also the governments around the globe are promoting lower energy consumption vehicles. Ford is investing about $11 billion for the electric vehicles and plans to bring about 40 electric vehicles in its model line-up.

Risks: The trade wars are a concern. Brexit is another concern. Ford operates two engine plants in the UK and employs about 13,000 people. The slowing global economy is also a worry for the automobile industry.

Conclusion: The company is fundamentally strong with good valuations. However, slowing revenue growth is a concern.