Critical Review: Ford Motor (NYSE:F) and Volkswagen (OTC:VWAGY)

Ford Motor (NYSE:F) and Volkswagen (OTC:VWAGY) are both large-cap auto/tires/trucks companies, but which is the superior stock? We will compare the two companies based on the strength of their valuation, dividends, profitability, earnings, risk, analyst recommendations and institutional ownership.

Dividends

Ford Motor pays an annual dividend of $0.60 per share and has a dividend yield of 6.0%. Volkswagen pays an annual dividend of $0.64 per share and has a dividend yield of 6.2%. Ford Motor pays out 41.1% of its earnings in the form of a dividend. Volkswagen pays out 27.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Volkswagen is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Ford Motor has a beta of 1.59, indicating that its stock price is 59% more volatile than the S&P 500. Comparatively, Volkswagen has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500.

Valuation & Earnings

This table compares Ford Motor and Volkswagen”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ford Motor	$184.99 billion	0.22	$5.88 billion	$1.46	6.88
Volkswagen	$348.78 billion	0.15	$17.97 billion	$2.31	4.48

Volkswagen has higher revenue and earnings than Ford Motor. Volkswagen is trading at a lower price-to-earnings ratio than Ford Motor, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

58.7% of Ford Motor shares are owned by institutional investors. 0.8% of Ford Motor shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Ford Motor and Volkswagen’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ford Motor	3.18%	16.88%	2.64%
Volkswagen	3.77%	6.35%	1.96%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Ford Motor and Volkswagen, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ford Motor	3	10	4	0	2.06
Volkswagen	0	0	0	0	0.00

Ford Motor currently has a consensus price target of $11.37, suggesting a potential upside of 13.16%. Given Ford Motor’s stronger consensus rating and higher probable upside, equities analysts plainly believe Ford Motor is more favorable than Volkswagen.

Summary

Ford Motor beats Volkswagen on 10 of the 16 factors compared between the two stocks.

About Ford Motor

Ford Motor Company develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue, Ford Model e, and Ford Pro; Ford Next; and Ford Credit segments. The company sells Ford and Lincoln vehicles, service parts, and accessories through distributors and dealers, as well as through dealerships to commercial fleet customers, daily rental car companies, and governments. It also engages in vehicle-related financing and leasing activities to and through automotive dealers. In addition, the company provides retail installment sale contracts for new and used vehicles; and direct financing leases for new vehicles to retail and commercial customers, such as leasing companies, government entities, daily rental companies, and fleet customers. Further, it offers wholesale loans to dealers to finance the purchase of vehicle inventory; and loans to dealers to finance working capital and enhance dealership facilities, purchase dealership real estate, and other dealer vehicle programs. The company was incorporated in 1903 and is based in Dearborn, Michigan.

About Volkswagen

Volkswagen AG manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific. The company operates in four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. The Passenger Cars and Light Commercial Vehicles segment develops vehicles and engines, and light commercial vehicles; and produces and sells passenger cars and related parts. The Commercial Vehicles segment develops, produces, and sells trucks and buses; and offers parts and related services. The Power Engineering segment offers large-bore diesel engines, turbomachinery, special gear units, and propulsion components. The Financial Services segment provides dealer and customer financing, leasing, banking and insurance, fleet management, and mobility services. The company also offers motorcycles. It provides its products under the Volkswagen Passenger Cars, Audi, ŠKODA, SEAT, Bentley, Porsche, Volkswagen Commercial Vehicles, Scania, MAN, Lamborghini, Ducati, and Bugatti brands. Volkswagen AG was incorporated in 1937 and is based in Wolfsburg, Germany. Volkswagen AG operates as a subsidiary of Porsche Automobil Holding SE.