Corporate News


Ford got a lot of publicity recently because of the fact that Tesla had surpassed its valuation despite selling just a tiny fraction of the number of vehicles that Ford sells. This article says that the PR has reminded that Ford could be a major buying opportunity, as the company looks cheap. The stock currently trades at just 7x 2018 projected earnings and yields a whopping 5.4%. The dividend also looks stable is it is under 40%. The company has the fifth lowest P/E ratio in the S&P 500; GM is the lowest. Concerns for Ford are centered around its exposure to the subprime auto loans as well as the strength of the US auto market, its core operation. Ford insists the credit business is strong.

FINSUM: The low valuation and strong dividend make Ford attractive, while the credit exposure is a bit worrying. More research would need to be done, but it could prove a strong buy.

Source: Barron’s

(New York)

Walmart may have just taken a big step forward in the fight against Amazon. The firm announced that it will offer discounts on over 1 million items that consumers buy online and then pickup in store. The plan comes from Walmart’s acquisition of which pioneered similar new options, like getting a better price if you forgo the option to return the product. Walmart’s head of ecommerce said of the change that “Quite simply, it costs less for us to ship to stores. So, our customers should share in those savings”. Walmart has a 4,700 network to use for the plan.

FINSUM: This is a smart play by Walmart as it is using what it has, but Amazon doesn’t—physical stores—to its advantage. The question will be whether the discounts will be enough to entice people to go to stores.

Source: Bloomberg

(New York)

This article contends that there has been a lot of confusion over what a new version of Glass-Steagall would really mean. The main source of confusion seems to surround the idea of why Gary Cohn, longtime Goldman Sachs man, would support legislation that would cause such massive upheaval in banking. The answer is simple: such a rule change would be a big competitive advantage for smaller banks like Goldman Sachs and Morgan Stanley, who are still not conventional deposit-taking institutions. If massive rivals like JP Morgan, Citi, and Bank of America could no longer use their enormous balance sheets to their advantage in investment banking, it would be a big competitive boon to the likes of Goldman Sachs.

FINSUM: This helps explain Cohn’s previously quizzical perspective on this issue, even if it is quite obvious. However, it is sill surprising that in his new role he would desire such a big change to the US financial system.

Source: Financial Times

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