Ford Motor's Stock Performance: A Closer Look at the Last Three Years

Investing in the stock market can be a rewarding endeavor, especially when you pick the right stocks.

One such example is Ford Motor Company (NYSE:F), which has delivered an impressive 95% gain over the past three years, outperforming the market return of 32% (excluding dividends).

Let's delve into the company's performance and assess whether its long-term trajectory aligns with its underlying business progress.

Ford Performance

While some still adhere to the efficient markets hypothesis, it has become evident that markets are dynamic systems prone to overreaction, and investors' behavior is not always rational. One way to gauge changing sentiment around a company is by comparing its earnings per share (EPS) with the share price.

During the three-year period of share price growth, Ford Motor transitioned from a loss-making to a profitable company. This is generally viewed as a positive development, which should ideally lead to an increase in the share price. However, it's important to not solely focus on past performance but also consider the future prospects of the company.

What about dividends?

Taking into account the total shareholder return (TSR) provides a more comprehensive picture of a stock's performance, incorporating dividends, spin-offs, and discounted capital raisings. For Ford Motor, the TSR over the last three years stands at an impressive 117%, surpassing the share price return mentioned earlier. It becomes apparent that dividend payments played a significant role in driving this divergence.

Taking a different perspective, Ford Motor investors experienced a challenging year, with a total loss of 4.7% (including dividends), while the market gained approximately 2.1%. It is not uncommon for even good stocks to witness occasional declines. However, what matters most is the improvement in fundamental metrics, signaling long-term sustainability. On a positive note, long-term shareholders have enjoyed an average gain of 4% per year over the past five years.

To truly comprehend the trajectory of Ford Motor, it's crucial to consider various other factors beyond share price performance. Fundamental data, industry trends, and competitive positioning all play integral roles in understanding a company's overall health.

As investors evaluate their options in the market, keeping a close eye on share price performance is essential. However, a comprehensive analysis of the company's fundamentals and long-term prospects is equally important. Ford Motor's journey over the past three years showcases its resilience and ability to deliver returns. As always, prudent investors will conduct thorough research before making any investment decisions, taking into account the broader landscape and the company's future growth potential.