Ford Stock Gains Ground As Tata Motors Is Reportedly Ready To Buy Ford’s Chennai Factory

Shares of Ford gained additional upside momentum after reports indicated that Tata Motors may take over the company’s Chennai factory.

The reports provided support to Ford stock as the company has previously announced its decision to restructure its India operations. According to Ford’s plans, manufacturing at Chennai engine and vehicle assembly plants was expected to wind down by Q2 2022.

Ford stated that it accumulated operating losses of more than $2 billion over the past 10 years, and restucturing was necessary to create a profitable business in India.

In this light, a successful sale of the Chennai unit should serve as a material positive catalyst for Ford stock. While the current move of the stock is based on a report rather than on an official announcement, the deal looks logical and has decent chances to go through.

What’s Next For Ford Stock?

Ford stock has been under pressure for several months amid worries about lower sales due to global chip shortage. However, the market has managed to focus on Ford’s plans in the electic vehicle space, and the company’s shares gained some upside momentum at the end of September.

Currently, analysts expect that Ford will report earnings of $1.57 per share in the current year and $1.87 per share in the next year, so the stock is trading at 8 forward P/E which is cheap for the current market environment.

The key question for Ford investors is whether the market will start to pay attention to electric vehicle plans of legacy automakers. At this point, the valuation gap between legacy automakers and electric vehicle leader Tesla is astronomical. If this gap begins to close, Ford stock will be able to develop strong upside momentum and move to multi-year highs.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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