Bulls Say:
•Ford recently resumed its dividend and received an investment-grade credit rating from major rating agencies.
•The revamped Fiesta, Focus, Fusion, and Taurus show Ford can make quality, fuel-efficient vehicles to compete with Toyota and Honda.
•We expect Ford's free cash flow generation to significantly improve over the coming years.
•Ford is ahead of GM in its use of common vehicle platforms.
Bears Say:
•The auto industry is very cyclical, and until recently, Detroit automakers had been losing U.S. market share to foreign automakers for years.
•Long-term profitability could be hindered by unions, which traditionally have wanted their share of the pie. The nonunionized import automakers in the U.S. do not have this problem.
•Stricter fuel economy regulations will make cars more expensive to build, and these costs are likely to be passed on to consumers.
•Ford's stock can sell off heavily because of macroeconomic fears, even if the company itself is doing well.
•Although Ford's products are much improved, there are plenty of Americans who refuse to buy from a Detroit automaker because of prior quality problems.