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The biggest challenge when analysing Ford is how to treat the Financial Services Segment, which is how Ford describes its financing arm in its annual report. The car manufacturing part of Ford is called the Automotive Segment. The Automotive Segment creates 93% of the revenue for Ford according to the 2017 Annual Report.
However, the profit generated, by the Financial Services Segment is 38% of the total profit in 2017. In the past any problems in the Financial Services Segment have adversely impacted earnings figures as a result of higher interest expense or losses on loans. The impact can be seen in the earnings history in the value analysis report.
However, it is also true that the profit numbers since 2010 have been fairly consistent and gives a measure of comfort for value investors. The consistency of the earnings figures since 2010 gives confidence to value investors that the relationship between the price of the common stock and the earnings per share statistic gives a good indication of Ford’s current value. If the price of Ford’s common stock looks cheap in comparison to the earnings figures it gives a good indication that Ford is really cheap.
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