It’s safe to buy Ford again. Ford as in the F share. After trading at close to $15 in April, it could be had below $10 yesterday. A bargain. Or so it seems.
As we all know, Ford does pretty well selling cars, but without the help of D.C. sugar daddies, their balance sheet is a mess. Ford ended the first quarter with a debt of $34.3 billion. The market was worried that Ford would issue additional shares to pay off that debt, which would seriously dilute current stockholders. So the stock pushed the “Down” button.
In April, Ford paid off $3b in debt, which provided the lift to $14.57. Then, with new payments looming, the share went South again. Today, Ford wiped another $4 billion in debt off its overloaded balance sheet, reports Reuters. Today’s move will save more than $470 million in annual interest payments, Ford said. Their debt load is now down to $27b. Ford has forecast a solid profit for 2010.
According to the New York Times, “Ford’s debt load has been analysts’ biggest concern about the automaker, which has been profitable for four consecutive quarters and projects positive cash flow this year. The announcement suggests that Ford will report strong results for the second quarter, which ends Wednesday.” Buy Ford before someone else does.