ford f fairly valued buying index™ 6 value rating

16
Valuentum Retail Equity Research Ratings as of 3-Feb-2022 Data as of 3-Feb-2022 Buying Index™ 3 Value Rating Economic Castle Neutral Investment Considerations DCF Valuation Relative Valuation Stock Chart (weekly) ValueCreation™ ValueRisk™ ValueTrend™ Cash Flow Generation Financial Leverage Growth Technical Evaluation Relative Strength Money Flow Index (MFI) Upside/Downside Volume (U/D) Near-term Technical Resistance, 10-wk MA DCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average Business Quality ValueCreation™ ValueRisk™ Very Poor Poor Good Excellent Company Vitals Investment Highlights Market Cap (USD) $81,864 Avg Weekly Vol (30 wks) 405,283 30-week Range (USD) 12.38 - 25.87 Valuentum Sector Consumer Discretionary 5-week Return -14.5% 13-week Return 5.9% 30-week Return 55.5% Dividend Yield % 1.9% Firms that generate economic profits with little operating variability score near the top right of the matrix. Dividends per Share 0.40 Relative Valuation Forward P/E PEG Price / FV Forward Dividend Payout Ratio 20.6% Disney 36.6 2.3 78.6% Est. Normal Diluted EPS 2.16 Home Depot 23.7 1.9 100.8% P/E on Est. Normal Diluted EPS 9.5 McDonald's 27.5 1.9 120.0% Est. Normal EBITDA 20,614 Nike 39.5 2.9 106.3% Forward EV/EBITDA 10.4 Peer Median 32.0 2.1 103.5% EV/Est. Normal EBITDA 9.4 Ford 10.6 NMF 108.4% Forward Revenue Growth (5-yr) 7.3% Price / FV = Current Stock Price divided by Estimated Fair Value Forward EPS Growth (5-yr) -248.9% Financial Summary Projected NMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year Fiscal Year End: Dec-19 Dec-20 Dec-21 Returns Summary 3-year Historical Average Revenue 155,900 127,144 138,841 Return on Equity 2.2% Revenue, YoY% -2.8% -18.4% 9.2% Return on Assets 0.3% Operating Income 574 -4,408 10,717 ROIC, with goodwill 14.5% Operating Margin % 0.4% -3.5% 7.7% ROIC, without goodwill 14.5% Net Income 47 -1,279 7,704 ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 0.0% -1.0% 5.5% Leverage, Coverage, and Liquidity Diluted EPS 0.01 -0.32 1.94 In Millions of USD Diluted EPS, YoY % -98.7% -2842.5% -702.4% Total Debt 161,684 Free Cash Flow (CFO-capex) 10,007 18,527 9,681 Net Debt 111,723 Free Cash Flow Margin % 6.4% 14.6% 7.0% Total Debt/EBITDA 53.3 In Millions of USD (except for per share items) Net Debt/EBITDA 36.8 LARGE-C EBITDA/Interest 1.8 VERY POOR Current Ratio 1.2 Quick Ratio 1.1 Ford F FAIRLY VALUED Low High • Ford has been around for a long time, producing and selling automobiles, and its main brands are Ford and Lincoln. The company also has a large vehicle financing operation. Ford aims to continuously improve its electric vehicle and autonomous driving technology going forward as it plans to make those offerings a bigger part of its business. EXCELLENT HIGH STRONG NEUTRAL $12.00 - $26.00 Estimated Fair Value Sector MODEST STRONG POSITIVE HIGH Very High The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected]. 1 Structure of the Auto Manufacturers Industry The auto manufacturers industry is characterized by high fixed costs, substantial operating leverage, and intense competition. Vehicle sales are impacted by general economic conditions, which are largely out of the control of participants, and by the cost of credit and fuel. Excess capacity, price discounting and other marketing initiatives can pressure the top line, while rising raw material and labor costs can squeeze the bottom line. Changing consumer preferences in type, model and fuel-efficiency can cause abrupt shifts in market share. The structural characteristics of the group are very poor. Fair Value Range Ford has been contending with higher steel and aluminum prices in recent quarters, though its ample pricing power has helped offset those headwinds, to a degree. Ford is pivoting towards EVs and autonomous driving. Investment Style Industry $19.00 NEUTRAL LARGE-CAP CORE Consumer Discretionary Discretionary Spending FAIRLY VALUED VERY BEARISH Medium In October 2021, Ford reinstated its dividend program after suspending it in March 2020. Ford owns a sizable stake in Rivian, an EV maker that went public in November 2021, and Argo AI, a self-driving technology company. Argo AI has considered going public in the past. Ford and Volkswagen expanded their global partnership in 2019, which will see the duo work together on autonomous vehicle and EV technologies. This deal was done in large part so Ford could gain access to Volkswagen’s EV architecture to assist in Ford’s efforts to grow its EV business, which currently is a relatively small part of its overall operations. ----- Actual ----- • Ford is testing out autonomous vehicles via pilot projects in the US with the aim of launching a commercial autonomous vehicle service within a couple of years. We are intrigued by its exposure to this space, though these are still early days. The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar). NMF = Not Meaningful; Debt excludes debt associated with the finance sub. DETERIORATING • The EV manufacturing process is generally less labor intensive compared to ICE vehicles. As Ford grows its EV business that will act as a nice tailwind for its future operating margins, assisted by past efforts to rationalize its global manufacturing footprint. 21.00 Visit us at www.valuentum.com 11.00 13.00 15.00 17.00 19.00 21.00 23.00 25.00 27.00 0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 4,000,000,000 4,500,000,000 Page 1

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Page 1: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research Ratings as of 3-Feb-2022 Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Investment ConsiderationsDCF ValuationRelative Valuation

Stock Chart (weekly) ValueCreation™ValueRisk™ValueTrend™Cash Flow GenerationFinancial LeverageGrowthTechnical EvaluationRelative StrengthMoney Flow Index (MFI)Upside/Downside Volume (U/D)Near-term Technical Resistance, 10-wk MADCF = Discounted Cash Flow; MFI, U/D = Please see glossary. MA = Moving Average

Business Quality ValueCreation™

ValueRisk™ Very Poor Poor Good ExcellentCompany Vitals Investment HighlightsMarket Cap (USD) $81,864Avg Weekly Vol (30 wks) 405,28330-week Range (USD) 12.38 - 25.87Valuentum Sector Consumer Discretionary5-week Return -14.5%13-week Return 5.9%30-week Return 55.5%Dividend Yield % 1.9% Firms that generate economic profits with little operating variability score near the top right of the matrix.

Dividends per Share 0.40 Relative Valuation Forward P/E PEG Price / FV

Forward Dividend Payout Ratio 20.6% Disney 36.6 2.3 78.6%Est. Normal Diluted EPS 2.16 Home Depot 23.7 1.9 100.8%P/E on Est. Normal Diluted EPS 9.5 McDonald's 27.5 1.9 120.0%Est. Normal EBITDA 20,614 Nike 39.5 2.9 106.3%Forward EV/EBITDA 10.4 Peer Median 32.0 2.1 103.5%EV/Est. Normal EBITDA 9.4 Ford 10.6 NMF 108.4%Forward Revenue Growth (5-yr) 7.3% Price / FV = Current Stock Price divided by Estimated Fair Value

Forward EPS Growth (5-yr) -248.9% Financial Summary ProjectedNMF = Not Meaningful; Est. = Estimated; FY = Fiscal Year

Fiscal Year End: Dec-19 Dec-20 Dec-21

Returns Summary 3-year Historical Average Revenue 155,900 127,144 138,841Return on Equity 2.2% Revenue, YoY% -2.8% -18.4% 9.2%Return on Assets 0.3% Operating Income 574 -4,408 10,717ROIC, with goodwill 14.5% Operating Margin % 0.4% -3.5% 7.7%ROIC, without goodwill 14.5% Net Income 47 -1,279 7,704ROIC = Return on Invested Capital; NMF = Not Meaningful Net Income Margin % 0.0% -1.0% 5.5%Leverage, Coverage, and Liquidity Diluted EPS 0.01 -0.32 1.94In Millions of USD Diluted EPS, YoY % -98.7% -2842.5% -702.4%Total Debt 161,684 Free Cash Flow (CFO-capex) 10,007 18,527 9,681Net Debt 111,723 Free Cash Flow Margin % 6.4% 14.6% 7.0%Total Debt/EBITDA 53.3 In Millions of USD (except for per share items)

Net Debt/EBITDA 36.8 LARGE-CEBITDA/Interest 1.8 VERY POORCurrent Ratio 1.2Quick Ratio 1.1

Ford F FAIRLY VALUED

Low

High

• Ford has been around for a long time, producing andselling automobiles, and its main brands are Ford andLincoln. The company also has a large vehiclefinancing operation. Ford aims to continuouslyimprove its electric vehicle and autonomous drivingtechnology going forward as it plans to make thoseofferings a bigger part of its business.

EXCELLENTHIGH

STRONGNEUTRAL

$12.00 - $26.00 Estimated Fair Value Sector

MODEST

STRONGPOSITIVE

HIGH

Very High

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

1

Structure of the Auto Manufacturers IndustryThe auto manufacturers industry is characterized by high fixed costs, substantial operating leverage, and intense competition. Vehicle sales are impacted by general economic conditions, which are largely out of the control of participants, and by the cost of credit and fuel. Excess capacity, price discounting and other marketing initiatives can pressure the top line, while rising raw material and labor costs can squeeze the bottom line. Changing consumer preferences in type, model and fuel-efficiency can cause abrupt shifts in market share. The structural characteristics of the group are very poor.

Fair Value Range

Ford has been contending with higher steel and aluminum prices in recent quarters, though its ample pricing power has helped offset those headwinds, to a degree. Ford is pivoting towards EVs and autonomous driving.

Investment Style Industry $19.00

NEUTRAL

LARGE-CAP CORE Consumer Discretionary Discretionary Spending

FAIRLY VALUED

VERY BEARISH

Medium

• In October 2021, Ford reinstated its dividendprogram after suspending it in March 2020. Ford ownsa sizable stake in Rivian, an EV maker that wentpublic in November 2021, and Argo AI, a self-drivingtechnology company. Argo AI has considered goingpublic in the past.

• Ford and Volkswagen expanded their globalpartnership in 2019, which will see the duo worktogether on autonomous vehicle and EV technologies.This deal was done in large part so Ford could gainaccess to Volkswagen’s EV architecture to assist inFord’s efforts to grow its EV business, which currentlyis a relatively small part of its overall operations.

----- Actual -----

• Ford is testing out autonomous vehicles via pilotprojects in the US with the aim of launching acommercial autonomous vehicle service within acouple of years. We are intrigued by its exposure tothis space, though these are still early days.

The week with the highest trading volume out of the last 30 weeks was a week of heavy selling, or distribution (red bar).

NMF = Not Meaningful; Debt excludes debt associated with the finance sub.

DETERIORATING

• The EV manufacturing process is generally less laborintensive compared to ICE vehicles. As Ford grows itsEV business that will act as a nice tailwind for itsfuture operating margins, assisted by past efforts torationalize its global manufacturing footprint.

21.00

Visit us at www.valuentum.com

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13.00

15.00

17.00

19.00

21.00

23.00

25.00

27.00

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Page 1

Page 2: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Economic Profit Analysis

ValueCreation™ EXCELLENT Return on Invested Capital (ROIC)

ROIC - WACC Spread, 3-year historical average 5.0%ROIC - WACC Spread, 5-year projected average 12.5%These spreads equal the firm's annual average ROIC (excluding goodwill) less its WACC.

ValueTrend™ POSITIVE

Weighted Average Cost of Capital (WACC) The graph above shows the firm's ROIC (excluding goodwill) compared with historical averages and its WACC.

ROIC CalculationFiscal Year End: Dec-18 Dec-19 Dec-20

Earnings before InterestOperating Income after Depreciation 3,203 574 -4,408- Adjusted Taxes (at 15% of EBIT) 480 86 -661+ Amortization 2,909 3,409 2,747+ Non-cash Operating Items -695 9,065 18,104- Minority Interest 18 37 3Earnings before Interest 4,919 12,925 17,101

Cost of Equity Invested CapitalRisk Free Rate Assumption Inventories 11,220 10,786 10,808Fundamental Beta (ERP multiplier) + Receivables 64,484 62,888 52,394Estimated Equity Risk Premium + Current Deferred Income Taxes 0 0 0Cost of Equity Assumption + Other Current Assets 3,930 5,722 3,581

+ Property, Plant and Equipment, Net 36,178 36,469 37,083After-tax Cost of Debt + Goodwill, Net (Cost in Excess) 0 0 0Risk Free Rate Assumption + Intangibles 0 0 0Synthetic Credit Spread + Non Current Deferred Income Taxes 10,412 11,863 12,423Cost of Debt Assumption - Accounts Payable 21,520 20,673 22,204Cash Tax Rate Assumption - Other Current Liabilities 20,556 23,513 23,645After-tax Cost of Debt Assumption

Invested Capital, with goodwill 84,148 83,542 70,440Cost of Preferred Stock Invested Capital, without goodwill 84,148 83,542 70,440Preferred DividendsValue of Preferred Stock Return on Invested Capital, with goodwill 6.0% 15.4% 22.2%Cost of Preferred Assumption Return on Invested Capital, without goodwill 6.0% 15.4% 22.2%

In Millions of USD

Weighted Average Cost of Capital (WACC)ERP = Equity Risk Premium

Ford F FAIRLY VALUED

0

8.3%15.0%

0NA

9.5%

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

7.1%

4.3%

10.2%

The cap structure above excludes finance subsidiary debt. We add the value of the finance sub to the equity value of the firm's operations, so considering it here would result in double counting.

$19.00 $12.00 - $26.00 LARGE-CAP CORE

Ford receives a ValueTrend™ rating of POSITIVE, which is based on the company'strailing three-year performance. The firm's ROIC (excluding goodwill) increased to22.2% last year from its trailing 3-year average of 14.5%. We expect ROIC (excludinggoodwill) to be in the ballpark of about 21% by the end of our discrete forecast period,with upside potential to about 30% over that time period.

The best measure of a firm's ability to create value for shareholders is expressed bycomparing its return on invested capital (ROIC) with its weighted average cost ofcapital (WACC). The gap or difference between ROIC and WACC is called the firm'seconomic profit spread. Ford's 3-year historical return on invested capital (withoutgoodwill) is 14.5%, which is above the estimate of its cost of capital of 9.5%. As such,we assign the firm a ValueCreation™ rating of EXCELLENT. In the chart to the right,we show the probable path of ROIC in the years ahead based on the estimated volatilityof key drivers behind the measure. The solid grey line reflects the most likely outcome,in our opinion, and represents the scenario that results in our fair value estimate.

Consumer Discretionary Discretionary Spending Estimated Fair Value Fair Value Range Investment Style Sector Industry

4.3%4.00%

---------- Actual ----------

0.96.5%

Note: Valuentum may provide an adjusted ROIC measure to better reflect the economic substance of a company's operations, as in the case of companies with negative invested capital.

30.0%

21.1%

6.0%

15.4%

22.2%

12.1%

WACC, 9.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

79.1%

20.9%Equity

Debt

Preferred

Capital Structure

Page 2

Page 3: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Growth Analysis

Revenue Growth MODEST Projected Revenue (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

Revenue3-year Historical

CAGR5-year Projected

CAGRFord USD 127,144 -6.7% 7.3%

Disney USD 67,418 4.3% 11.9%

Home Depot USD 132,110 9.4% 6.0%

McDonald's USD 19,208 -5.6% 11.2%

Nike USD 44,538 7.0% 9.9%

Peer Median 5.6% 10.5%

Industry Median 3.7% 7.8%

In the chart above, we show our baseline forecast for revenue as well as potential upside and downside cases.

EBITDA Growth Projected EBITDA (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year

EBITDA3-year Historical

CAGR5-year Projected

CAGRFord USD 3,033 -38.9% 48.8%

Disney USD 8,770 -21.1% 31.6%

Home Depot USD 20,797 7.5% 12.2%

McDonald's USD 8,957 -2.8% 15.6%

Nike USD 7,681 13.7% 12.8%

Peer Median 2.3% 14.2%

Industry Median 6.5% 12.2%

In the chart above, we show our baseline forecast for EBITDA as well as potential upside and downside cases.

Net Income Growth Projected Net Income (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year Net Income

3-year Historical CAGR

5-year Projected CAGR

Ford USD -1,279 -155.2% -248.9%

Disney USD 2,024 -45.9% 58.8%

Home Depot USD 12,866 14.2% 14.4%

McDonald's USD 4,731 -3.1% 19.0%

Nike USD 5,727 43.6% 13.3%

Peer Median 5.6% 16.7%

Industry Median 1.0% 14.9%

In the chart above, we show our baseline forecast for net income as well as potential upside and downside cases.

Ford F FAIRLY VALUED

Ford's revenue expansion has trailed the median of both its peer group and its industrygroup during the past three years. We expect the firm's pace of revenue growth to fallbelow the median of both its peer group and industry group during the next five years.Our growth assessment of each firm is based on the firm's 5-year forward revenueCAGR. Ford's future pace of revenue growth is MODEST, in our opinion.

Ford's EBITDA expansion has trailed both that of its peer group and its industry groupduring the past three years. We expect the firm's EBITDA expansion to outpace its peergroup and industry group during the next five years. Ford sports the highest expectedEBITDA growth rate among peers.

Ford's net income expansion has trailed both that of its peer group and its industrygroup during the past three years. We expect the firm's pace of net income growth tofall below that of both its peer group and industry group during the next five years.Disney sports the highest expected net income growth rate among peers.

$19.00

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

$12.00 - $26.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending Estimated Fair Value Fair Value Range Investment Style Sector Industry

160,338 155,900

127,144

208,547

181,149

153,751

0

50,000

100,000

150,000

200,000

250,000

11,5119,064

3,033

35,937

22,115

8,293

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

3,677

47

-1,279

12,186

9,374

6,562

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Page 3

Page 4: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Cash Flow and Financial Leverage AnalysisCash Flow Generation STRONG Financial Leverage HIGH

The bars above show the firms operating cash flow, capital expenditures, and free cash flow, respectively. The bars above show the firm's annual debt-to-EBITDA including financial subsidiary debt. The red line shows the firm's normalized mea

Cash Flow from Operations Projected Operating Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year CFO

3-year Historical CAGR

5-year Projected CAGR

Ford USD 24,269 10.3% -3.1%

Disney USD 5,566 -27.0% 38.2%

Home Depot USD 18,839 16.1% 9.6%

McDonald's USD 6,265 4.1% 18.1%

Nike USD 6,657 10.3% 12.7%

Peer Median 7.2% 15.4%

Industry Median 10.3% 11.2%

In the chart above, we show our baseline forecast for CFO as well as potential upside and downside cases.

Free Cash Flow (CFO-capital expenditures) Projected Free Cash Flow (in millions of USD) Source: Company Filings, Valuentum Projections

Last Fiscal Year FCF

3-year Historical CAGR

5-year Projected CAGR Source: Company Filings, Valuentum Projections

Ford USD 18,527 18.8% -10.3%

Disney USD 1,988 -41.3% 59.6%

Home Depot USD 16,376 17.3% 9.7%

McDonald's USD 4,624 7.7% 19.2%

Nike USD 5,962 14.9% 11.6%

Peer Median 11.3% 15.4%

Industry Median 17.2% 9.7%

In the chart above, we show our baseline forecast for free cash flow as well as potential upside and downside cases.

Ford F FAIRLY VALUED

Firms that generate a free cash flow margin (free cash flow divided by total revenue)above 5% are usually considered cash cows. Ford's free cash flow margin has averagedabout 8.5% during the past 3 years. As such, we think the firm's cash flow generation isrelatively STRONG. The free cash flow measure shown above is derived by taking cashflow from operations less capital expenditures and differs from enterprise free cash flow(FCFF), which we use in deriving our fair value estimate for the company. For moreinformation on the differences between these two measures, please visit our website atValuentum.com. At Ford, cash flow from operations increased about 62% from levelsregistered two years ago, while capital expenditures fell about 26% over the same timeperiod.

LARGE-CAP CORE Consumer Discretionary Estimated Fair Value

$19.00

Ford's cash flow from operations expansion has been greater than that of its peer groupbut has trailed that of its industry group during the past three years. We expect thefirm's pace of cash flow from operations growth to fall below that of both its peer groupand industry group during the next five years. Disney sports the highest expected cashflow from operations growth rate among peers.

Ford's free cash flow expansion has been greater than that of both its peer group andindustry group during the past three years. We expect the firm's pace of free cash flowgrowth to fall below that of both its peer group and industry group during the next fiveyears. Disney sports the highest expected free cash flow growth rate among peers.

Fair Value RangeDiscretionary Spending $12.00 - $26.00

Firms that exhibit high leverage tend to be more risky than firms with relatively lowdebt loads, all else equal. We measure financial leverage by taking a firm's currenttotal debt load and dividing it by the firm's trailing average 3-year annual EBITDA.Firms that are over 3 for this metric, we rate as having high leverage. Companies thathave less than 1.5 turns of leverage (or a measure below 1.5), we rate as having lowleverage. Ford's normalized debt-to-EBITDA measure, which excludes finance subdebt, of about 20.55 puts it in the HIGH camp.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Sector IndustryInvestment Style

15,02217,639

24,269

7,785 7,6325,742

7,23710,007

18,527

Dec-18 Dec-19 Dec-20

Cash from Operations Capital Expenditures Free Cash Flow

Ford - normalized leverage, 20.55

0

10

20

30

40

50

60

12/31/2018 12/31/2019 12/31/2020

Ford- annual leverage Ford - normalized leverageMedium Threshold HighThreshold

15,02217,639

24,269 24,957

20,768

16,578

0

5,000

10,000

15,000

20,000

25,000

30,000

7,237

10,007

18,527

14,230

10,736

7,241

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Page 4

Page 5: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Valuation Analysis

Valuation Assumptions Valuation BreakdownIn Millions of USD (except for per share items)

Revenue CAGR %Avg. EBIT Margin %Avg. Cash Tax Rate %Earnings Before Interest CAGR %Earnings Per Share CAGR %Free Cash Flow to the Firm CAGR %Earnings before interest = Net operating profits less adjusted taxes

Phase II --> III FCFF CAGR % 4.5% (II) 3% (III)Cost of Equity %After-tax Cost of Debt %Discount Rate (WACC) %Synthetic credit spread = 4%

Phase I Present ValuePhase II Present ValuePhase III Present ValueTotal Firm Value

Net Balance Sheet Impact

Total Equity ValueDiluted Shares OutstandingFair Value per Share

DCF Valuation Summary Enterprise Free Cash FlowFiscal Year End: 12/31/2018 12/31/2019 12/31/2020

4,919 12,925 17,1015,399 5,081 4,6947,785 7,632 5,7424,380 -1,183 -12,003

- Acquisitions 0 0 0-1,847 11,557 28,056

In Millions of USD

Source: Company Filings, Valuentum Projections

Company NameValuentum Buying

Index™Forward Price-to-

Earnings

Price/Earnings-to-Growth (PEG), 5-

yearEV/Est. Normal

EBITDA

5-year Forward Earnings per Share CAGR

3-year Hist Avg ROIC, without

goodwillDividend Yield

%

Stock Price / Fair Value Estimate

Ford 3 10.6 NMF 9.4 -248.9% 14.5% 1.9% 108.4%

Disney 3 36.6 2.3 11.6 55.2% 8.5% 0.0% 78.6%

Home Depot 4 23.7 1.9 14.3 16.7% 58.8% 1.8% 100.8%

McDonald's 7 27.5 1.9 15.3 21.4% 28.4% 2.1% 120.0%

Nike 3 39.5 2.9 20.6 14.5% 47.6% 0.8% 106.3%

Peer Median 3.5 32.0 2.1 14.8 19.1% 38.0% 1.3% 103.5%

Industry Median 3.0 20.0 2.1 11.0 15.6% 38.1% 1.3% 91.6%

-111,553

Earnings before Interest

75,247

We think Ford is worth $19 per share with a fair value range of $12.00 - $26.00.The margin of safety around our fair value estimate is driven by the firm's HIGHValueRisk™ rating, which is derived from an evaluation of the historical volatility ofkey valuation drivers and a future assessment of them. Our near-term operatingforecasts, including revenue and earnings, do not differ much from consensus estimatesor management guidance. Our model reflects a compound annual revenue growth rateof 7.3% during the next five years, a pace that is higher than the firm's 3-year historicalcompound annual growth rate of -6.7%. Our model reflects a 5-year projected averageoperating margin of 7.1%, which is above Ford's trailing 3-year average. Beyond year5, we assume free cash flow will grow at an annual rate of 4.5% for the next 15 yearsand 3% in perpetuity. For Ford, we use a 9.5% weighted average cost of capital todiscount future free cash flows.

In addition to the firm's cap structure, the net balance sheet impact considers the funded status of the firm's pension (-16330) and our estimate of the value of its finance sub (16500). In Millions of USD

Fair Value Range

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

-248.9%

---------- Actual ----------

20.7

18.7

26.9

17.1

9.5

P/E on Est. Normal Diluted EPS

13.8

7.3%7.1%

Ford F FAIRLY VALUED

44,47182,227

View back of report for a full list of industry constituents covered by Valuentum. VBI: Valuentum's ranking for the attractiveness of this investment at the date of the report.

IndustryInvestment Style Sector

- Capital Expenditures

Estimated Fair Value

Results

Long-term Projections

10.2%

18.2

9.5%

In the chart below, we show the build up to our estimate of total enterprise value forFord and the break down to the firm's total equity value, which we estimate to beabout 75.25USD billion. The present value of the enterprise free cash flows generatedduring each phase of our model and the net balance sheet impact, which considersthe firm's pension and finance sub, is displayed. We divide total equity value bydiluted shares outstanding to arrive at our $19 per share fair value estimate.

186,800

17.5

16.9

18.9

29.0

5-year Projections

Forward EV/EBITDA

- Change in Working Capital

Enterprise Free Cash Flow (FCFF)

Our future forecasts for key valuation drivers result in a future free enterprise cashflow stream. Above, we show how we calculate enterprise free cash flow and thehistorical performance of the metric for Ford. Over the next five years, we expect thefirm's enterprise free cash flow to expand at about a -15% compound annual growthrate. During years 6 through 20, we expect the measure to grow at a 4.5% rate.Beyond year 20 (in perpetuity), we grow the firm's free cash flow at inflation (3%).

15.0%

10.4

+ Depreciation

7.1%

60,102

$19.00 $12.00 - $26.00 LARGE-CAP CORE Consumer Discretionary

20.7

Company Metrics versus Peer and Industry Medians

20.7

0.3%

Discretionary Spending

3,973.0

-15.4%

$19.00

44,471

82,227

60,102

111,553

75,247

020,00040,00060,00080,000

100,000120,000140,000160,000180,000200,000

Yr 1-5 Yr 6-20 Perpetuity Net Balance SheetImpact

Equity Value

Page 5

Page 6: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Margin of Safety Analysis

Range of Potential Outcomes ValueRisk™ HIGH

Revenue Volatility 12.1%Gross Margin Volatility 34.2%Earnings (EBI) Volatility 33.9%Cash Flow (FCFF) Volatility 45.8%Fair Value Range 35.0%The Fair Value Range sets the premium or discount on our estimate of the firm's fair value.

Upside and Downside ProbabilitiesProbability (fair value < $0) 0.33%Probability (fair value > 2x current share price) 0.08%

Future Path of Fair Value

The graph above shows the expected future fair value of the firm's shares relative to its current stock price.

$19.00 $12.00 - $26.00Sector Fair Value Range Investment Style

LARGE-CAP CORE

Ford F FAIRLY VALUED

Our discounted cash flow process values each firm on the basis of the present value ofall future free cash flows. Although we estimate the firm's fair value at about $19 pershare, every company has a range of probable fair values that's created by theuncertainty of key valuation drivers (like future revenue or earnings, for example). After all, if the future were known with certainty, we wouldn't see much volatility in themarkets as stocks would trade precisely at their known fair values. Our ValueRisk™rating sets the margin of safety or the fair value range we assign to each stock. In thegraph above, we show this probable range of fair values for Ford. We think the firm isattractive below $12 per share (the green line), but quite expensive above $26 per share(the red line). The prices that fall along the yellow line, which includes our fair valueestimate, represent a reasonable valuation for the firm, in our opinion.

Estimated Fair Value

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

We strive to answer a few questions that investors often ask: 1) What are the chancesof a total loss of investment in this company? and 2) What is the chance that thecompany is really worth twice what I paid for it? The probability (fair value < 0)strives to answer the first question. It indicates the chance that the firm mayencounter insolvency based on the characteristics of its cash flow stream, capitalstructure, and risk profile. The probability (fair value > 2x current share price) strivesto answer the second question. It is our best estimate of whether investors areparticipating in a half-off sale by buying the company's shares at current prices.Based on the metrics above, it doesn't look like insolvency or a half-off sale is in thecards at this time for Ford.

We estimate Ford's fair value at this point in time to be about $19 per share. As timepasses, however, companies generate cash flow and pay out cash to shareholders in theform of dividends. The chart to the right compares the firm's current share price withthe path of Ford's expected equity value per share over the next three years, assumingour long-term projections prove accurate. The range between the resulting downsidefair value and upside fair value in Year 3 represents our best estimate of the value of thefirm's shares three years hence. This range of potential outcomes is also subject tochange over time, should our views on the firm's future cash flow potential change. Theexpected fair value of $24 per share in Year 3 represents our existing fair value pershare of $19 increased at an annual rate of the firm's cost of equity less its dividendyield. The upside and downside ranges are derived in the same way, but from the upperand lower bounds of our fair value estimate range.

IndustryDiscretionary Spending

Ford receives a ValueRisk™ rating of HIGH based of the historical volatility of keydrivers of economic value creation. The fair value range sets the margin of safetyaround our fair value estimate of the firm's shares.

Consumer Discretionary

$12

$19

$26

-20 -10 0 10 20 30 40 50

$33

$24Current Share Price, $21

$15

$0

$5

$10

$15

$20

$25

$30

$35

Current Share Price Yr 1 Fair Value Yr 2 Fair Value Yr 3 Fair Value

Page 6

Page 7: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Technical Analysis

Technical Evaluation VERY BEARISH Money Flow Index (MFI) NEUTRAL

30-week Price and Volume Chart (weekly)Relative Price Strength STRONG

5-week Company Performance -14.5%5-week Market Benchmark Performance 2.5%5-week Relative Performance vs. Market Benchmark -17.0%13-week Company Performance 5.9%13-week Market Benchmark Performance 1.4%13-week Relative Performance vs. Market Benchmark 4.4%30-week Company Performance 55.5%30-week Market Benchmark Performance 13.0%30-week Relative Performance vs. Market Benchmark 42.5%

Upside/Downside Volume DETERIORATING Timeliness Matrix™ Equity Valuation

Relative Strength

Firms that are undervalued and currently showing near-term pricing strength score near the top right of the matrix.

Ford F FAIRLY VALUED

Neutral

Estimated Fair Value Fair Value Range

Strong

Overvalued

Industry $19.00

UndervaluedFairly Valued

Investment Style

The Money Flow Index (MFI) is an oscillator that uses price and volume to measurebuying and selling pressure. Chartists often look for overbought (above 80) andoversold (below 20) levels to warn of unsustainable near-term price extremes. Ford'sMFI of 58 is neutral, suggesting the firm's stock is neither overbought nor oversold atthis time. However, a score over 50 tends to favor bulls. The MFI can also be used togauge the strength or weakness of a firm's price trend. In Ford's case, its stock priceand money flow neither reveals a bullish nor bearish divergence, further supportingour neutral view on its money flow action.

The firm's near-term moving average (5-week, grey line) and medium-term movingaverage (13-week, red line) are shown in the chart above. Typically, when a shorter-term moving average crosses a medium- or longer-term moving average from below, itrepresents a bullish signal. If the short-term moving average crosses from above, tradersoften view this as bearish. Ford's 5-week moving average will soon cross below its 13-week moving average if current price levels hold. Such activity is often called a deathcross, which we view as VERY BEARISH.

1

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Weak

The level and trend of the Upside/Downside (U/D) volume ratio reveals whetherinstitutional participation has been bullish or bearish as of late. Although Ford's U/Dvolume ratio of 1.7 is greater than 1, it resides below its trailing average, indicatingbullish but DETERIORATING institutional interest during the past several weeks.

SectorConsumer Discretionary

In the chart above, we pinpoint the heaviest accumulation or distribution week of thefirm, determined by the week with the highest trading volume during the past 30 weeks.A heavy accumulation (buying) or distribution (selling) week often determines thefuture near-term direction of the firm's share price, as money managers continue tomove in or out of the stock in the days and weeks ahead driving the stock up or down,respectively. For Ford, the week with the highest trading volume out of the last 30weeks was a week of heavy buying, or accumulation (green bar). Such market activitycould indicate a reversal of a downtrend or further confirmation of the firm's uptrend.

A firm's relative price strength can be assessed over any number of time horizons. Weshow the firm's performance over the past 5 weeks, 13 weeks, and 30 weeks below.In arriving at our relative strength rating for each company, we assess the past 13weeks, which includes the market's reaction to the firm's most recently reportedquarter, where applicable, and other more recent economic events. During the past 13weeks, Ford's shares returned 5.9%, while the market benchmark returned 1.4%. Wethink Ford's 13-week relative price performance is STRONG.

Discretionary Spending $12.00 - $26.00 LARGE-CAP CORE

Companies that are undervalued and showing near-term relative price strength couldrepresent timely buys, as the stock may be attractive to both value and momentuminvestors. A cross section of the firm's equity valuation and its relative share pricestrength is shown in the matrix above. We tend to prefer undervalued stocks that have strong pricing momentum, also called Valuentum stocks.

11

13

15

17

19

21

23

25

27

0500,000,000

1,000,000,0001,500,000,0002,000,000,0002,500,000,0003,000,000,0003,500,000,0004,000,000,0004,500,000,000

5-week Moving Average

13-week Moving Average

Stock Price

12

14

16

18

20

22

24

Overbought Line

Oversold Line

75

58

0102030405060708090

2.6

1.7

Average, 3.1

0.00.51.01.52.02.53.03.54.04.5

- 10-week Moving Average

Page 7

Page 8: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Pro Forma Income Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

Total Revenue 160,338 127,144

Cost of Goods Sold 136,269 112,752

Selling, General and Administrative Expenses 20,866 18,800

Other Operating Expenses 0 0

Operating Income 3,203 (4,408)

Unusual items 0 0

Operating Income, including unusual items 3,203 (4,408)

Interest Expense (1,228) (1,649)

Other Non-operating Income 2,370 4,941

Pre-tax Income 4,345 (1,116)

Income Taxes 650 160

Income after tax 3,695 (1,276)

Minority Interest and Equity Income (18) (3)

Net Income, excluding extra items 3,677 (1,279)

Income Available to Common, excluding extra items 3,677 (1,279)

Diluted Earnings per Share, excluding extra items 0.92 (0.32)

Diluted Weighted Shares Outstanding 3,998.0 3,973.0

Source: Company Filings, Xignite, Valuentum Projections

47

Dec-22

0.01

Ford F FAIRLY VALUED

8,186

2.06

Fair Value Range Investment Style

(194)

155,900

0

18,310

109,814

574

Consumer Discretionary Discretionary Spending

574

138,841

(1,020)

Dec-21

0

10,717 11,283

0

0

7,704

7,704

1.94

8,186

3,973.03,973.04,004.0

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

Estimated Fair ValueLARGE-CAP CORE

Sector Industry $19.00 $12.00 - $26.00

47

84

(640)

7,707

(37) (3) (3)

8,189

Dec-19

134,693

20,633

0

(724)

161,056

0

128,369

21,404

9,634

1,445

9,068

0

10,717

0

1,360

(1,649)

11,283

(1,649)

---------- Projected ----------

Page 8

Page 9: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Pro Forma Balance Sheet -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

AssetsTotal Cash (including marketable securities) 33,951 49,961Inventory 11,220 10,808Accounts Receivable 64,484 52,394Other Current Assets 3,930 3,581Total Current Assets 113,585 116,744

Gross Fixed Assets 66,040 69,931(Accumulated Depreciation) (29,862) (32,848)Net Property, Plant, and Equipment 36,178 37,083

Goodwill, Net 0 0Intangibles, Net 0 0Other Long-term Assets 106,777 113,434Total Assets 256,540 267,261

LiabilitiesAccounts Payable 21,520 22,204Other Current Liabilities 20,556 23,645Current Portion of Long-term Debt 53,493 51,343Total Current Liabilities 95,569 97,192

Long-term Debt 100,120 110,341Other Long-term Liabilities 24,919 29,038Total Liabilities 220,608 236,571

Preferred Stock 0 0

Shareholders' EquityCommon Stock and Additional Paid in Capital 22,047 22,331Retained Earnings 22,668 18,243Other Equity (8,783) (9,884)Total Shareholders' Equity 35,932 30,690

Total Liabilities and Shareholders' Equity 256,540 267,261

277,815

58,053 66,542

5,722 3,581 3,581

IndustryLARGE-CAP CORE

Ford F FAIRLY VALUED

$19.00Investment Style

Dec-21 Dec-22

51,34323,513 25,019 24,683

Consumer Discretionary

12,004

Sector

10,786

Discretionary Spending

Dec-19

Estimated Fair Value Fair Value Range

34,651

$12.00 - $26.00

10,398

54,408

20,673 21,265 24,932

53,946

75,960 82,472(31,020)67,489

98,132 97,628 100,958

258,537 294,745

51,343

225,352 237,007 240,337

0

22,206 22,331 22,33120,320 24,361 30,961(9,341) (5,884) 1,11633,185 40,808

101,361 110,341 110,34125,859 29,038 29,038

258,537 294,745

57,110 66,126

148,253129,142114,047

108,021 113,434 113,434

0 0 00 (2,747) (5,494)

62,888

(37,974) (43,920)36,469

0 0

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Source: Company Filings, Xignite, Valuentum Projections

---------- Projected ----------

37,986 38,552

277,815

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

Page 9

Page 10: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Pro Forma Cash Flow Statement -------------------- Historical --------------------

In Millions of USD (except for per share items)Dec-18 Dec-20

Cash from OperationsNet Income 3,695 (1,276)Depreciation and Amortization 8,308 7,441Deferred Income Taxes 0 0Operating Gains Or Losses (695) 18,104Changes in Working Capital 3,714 0

Cash Flow from Operations 15,022 24,269

Cash from InvestingPurchase of Property, Plant, Equipment (7,785) (5,742)Other Investing Cash Flows (8,476) (12,873)Cash Flow from Investing (16,261) (18,615)

Cash from FinancingIssuance (Retirement) of Stock (164) 0Issuance (Retirement) of Debt 3,139 3,095Dividends Paid (2,905) (596)Other Financing Cash Flows (192) (184)Cash Flow from Financing (122) 2,315

Foreign Exchange (370) 225

Net Change in Cash (1,731) 8,194

Dec-19 Dec-21 Dec-22

Ford F FAIRLY VALUED Estimated Fair Value Fair Value Range Investment Style Sector Industry

$19.00 $12.00 - $26.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

---------- Projected ----------

(6,089) 0 0

(226) 0 0

0 0

15,711 16,589

(7,632) (6,029)

84 7,707 8,1898,490

8,092 8,489

45 0 0

0 0(2,389) (1,589) (1,589)

(277)

(13,721) (6,029) (6,511)

7,873 8,693

(237)

(6,511)

17,639

0 0 09,065 4,000 7,000

0 (3,870) (7,292)

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

(1,589)(1,589)(3,129)

834

Source: Company Filings, Xignite, Valuentum Projections

Note: Pro forma data in discounted cash-flow valuation may reflect significant adjustments from GAAP accounting data, including cash (not effective) tax rates and other analytical adjustments on a backward-looking and forward-looking basis. No individual data, by itself, found in this report should be used to make any investment decision.

Page 10

Page 11: Ford F FAIRLY VALUED Buying Index™ 6 Value Rating

Valuentum Retail Equity Research (10=best) Data as of 3-Feb-2022

Buying Index™ 3 Value RatingEconomic Castle

Neutral

Discretionary SpendingDiscretionary Spending FAIRLY VALUED

Company Name TickerMarket Cap (USD-

mil) DCF Valuation ValueCreation™ ValueRisk™ ValueTrend™ Technicals Relative Strength

Activision ATVI 63,290 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BULLISH NEUTRAL

AutoZone AZO 47,139 FAIRLY VALUED EXCELLENT LOW POSITIVE BULLISH STRONG

Best Buy BBY 25,982 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

CarMax KMX 18,002 FAIRLY VALUED VERY POOR MEDIUM POSITIVE BEARISH WEAK

Chipotle CMG 41,350 FAIRLY VALUED EXCELLENT LOW NEGATIVE BEARISH WEAK

Cintas Corp CTAS 42,206 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Cracker Barrel CBRL 2,896 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Dick's Sporting DKS 10,460 UNDERVALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Disney DIS 255,493 FAIRLY VALUED GOOD MEDIUM NEGATIVE BEARISH WEAK

Dollar General DG 51,618 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Dollar Tree DLTR 31,532 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH STRONG

Domino's Pizza DPZ 17,708 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Estee Lauder EL 112,853 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Ford F 81,864 FAIRLY VALUED EXCELLENT HIGH POSITIVE VERY BEARISH STRONG

General Motors GM 77,248 FAIRLY VALUED GOOD MEDIUM POSITIVE BEARISH WEAK

Genuine Parts GPC 19,609 FAIRLY VALUED EXCELLENT LOW POSITIVE VERY BULLISH WEAK

Hasbro HAS 13,191 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Home Depot HD 399,733 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH NEUTRAL

Leggett & Platt LEG 5,300 UNDERVALUED EXCELLENT MEDIUM NEGATIVE BEARISH WEAK

Lowe's LOW 178,620 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH NEUTRAL

McDonald's MCD 196,241 FAIRLY VALUED EXCELLENT MEDIUM NEGATIVE VERY BULLISH STRONG

Netflix NFLX 188,823 FAIRLY VALUED VERY POOR HIGH POSITIVE BEARISH WEAK

Nike NKE 237,805 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Ralph Lauren RL 8,752 FAIRLY VALUED EXCELLENT HIGH NEGATIVE VERY BULLISH WEAK

Ross Stores ROST 33,870 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE NEUTRAL WEAK

Starbucks SBUX 114,294 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE NEUTRAL WEAK

Tesla TSLA 1,006,589 FAIRLY VALUED EXCELLENT HIGH POSITIVE BEARISH WEAK

TJX Cos TJX 86,050 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH NEUTRAL

Ulta Salon ULTA 20,907 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

VF Corp VFC 25,590 UNDERVALUED EXCELLENT LOW NEGATIVE BEARISH WEAK

Whirlpool WHR 13,127 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH WEAK

Williams-Sonoma WSM 12,773 FAIRLY VALUED EXCELLENT LOW POSITIVE BEARISH WEAK

Yum! Brands YUM 38,782 FAIRLY VALUED EXCELLENT MEDIUM POSITIVE BEARISH NEUTRAL

Williams-Sonoma WSM 9,028 FAIRLY VALUED EXCELLENT LOW NEGATIVE BULLISH STRONG

Estimated Fair Value Fair Value Range Investment Style Sector Industry

Ford F FAIRLY VALUED

$19.00 $12.00 - $26.00 LARGE-CAP CORE Consumer Discretionary Discretionary Spending

Relative Valuation

ATTRACTIVE

NEUTRAL

NEUTRAL

ATTRACTIVE

NEUTRAL

UNATTRACTIVE

NEUTRAL

NEUTRAL

UNATTRACTIVE

ATTRACTIVE

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP CORE

LARGE-CAP VALUE

MEGA-CAP CORE

MID-CAP VALUE

The above bar chart reveals the price/fair value of the company, its peers, and the industry as a whole.

We think the Discretionary Spending industry is fairly valued at this time. Theindustry's market cap is trading between 80% and 120% of our estimate of its fair valuebased on our DCF process. Although we use a firm-specific ValueRisk™ measure todetermine whether a firm is undervalued or overvalued based on our DCF process, weconsider an industry to be undervalued if it is trading below 80% of our estimate of itsfair value and overvalued if it is trading at over 120% of our estimate of its fair value.We think these fair value ranges are appropriate given the diversification benefits ofholding a basket of stocks. Although there may be individual opportunities within theDiscretionary Spending industry, we don't find the industry as a whole attractive basedsolely on valuation.

Shaded blue denotes that the firm has earned the highest rating for that respective category.Investment Style

LARGE-CAP BLEND

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP BLEND

LARGE-CAP BLEND

LARGE-CAP CORE

MID-CAP VALUE

LARGE-CAP VALUE

MEGA-CAP BLEND

LARGE-CAP VALUE

ATTRACTIVE

LARGE-CAP VALUE

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

LARGE-CAP GROWTH

LARGE-CAP CORE

LARGE-CAP VALUE

LARGE-CAP CORE

LARGE-CAP CORE

LARGE-CAP GROWTH

ATTRACTIVE

NEUTRAL

NEUTRAL

ATTRACTIVE

NEUTRAL

NEUTRAL

ATTRACTIVE

ATTRACTIVE

NEUTRAL

UNATTRACTIVE

UNATTRACTIVE

ATTRACTIVE

ATTRACTIVE

MID-CAP VALUE

NEUTRAL

ATTRACTIVE

NEUTRAL

ATTRACTIVE

NEUTRAL

ATTRACTIVE

LARGE-CAP BLEND

NEUTRAL

ATTRACTIVE

UNATTRACTIVE

NEUTRAL

MID-CAP BLEND

LARGE-CAP BLEND

LARGE-CAP BLEND

MEGA-CAP GROWTH

LARGE-CAP BLEND

LARGE-CAP GROWTH

LARGE-CAP VALUE

LARGE-CAP BLEND

MEGA-CAP GROWTH

108.4%

103.5%

91.6%

80%

85%

90%

95%

100%

105%

110%

Ford Peer Median Discretionary Spending

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Valuentum's Full Page Stock Report

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

BA

G

I

N

C

J

D

M

H

E

L

K

A DCF ValuationShows whether the firm is undervalued, fairly valued, or overvalued based on our DCF process and by how much.

B Valuentum Buying Index (VBI)Provides insight into the timeliness of an investment opportunity. We rank firms from 1 to 10 based on rigorous fiancial, valuation, and technical analysis. A 10 represents one of our top picks.

C Valuentum Value Rating (VVR) Indicates whether we think a firm is undervalued, fairly valued, or overvalued on the basis of our DCF process.

D Investment ConsiderationsEvaluates firms on 12 different measures, from the firm's growth and cash flow generation to the stock's money flow index and upside/downside volume. We reveal technical support and resistance levels.

E 30-week Price and Volume ActionDisplays the last accumulation or distribution week of the stock and historical price and volume action.

G Company VitalsShows sector,industry and other relevant company information.

H Business QualitySummary of the firm's ability to create value for shareholders compared wth the underlying risk of its operations.

I Normalized EPS and EBITDAEstimation of the firm's normalized earnings measures and the corresponding valuation mutliples.

J Investment HighlightsOur opinion of the company, including analysis of its financial and technical strengths and weaknesses.

K Relative ValuationComparison of the firm's PE, PEG, and Price/FV ratios versus peers.

L Returns Summary3-year averages of the firm's key return measures, including return on invested capital, with and without goodwill.

M Leverage, Coverage, and LiquidityA snapshot of the company's financial health.

N Financial SummaryA summary of the proforma financial statements found in the extended report.

VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

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UNDERVALUED

FAIRLY VALUED

OVERVALUED

• Revenue Volatility • Margin Volatility • Earnings Volatility • Cash Flow Volatility

The volatility of key valuation drivers are estimated and a margin of safety is determined.

The information and data contained in this report is not represented or warranted to be timely, complete, accurate, or correct. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this report, you should consider whether the information is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Historical firm-specific financial data generates our ValueCreation™, ValueRisk™, and ValueTrend™ ratings. The data provides the basis for our financial forecasts. Full annual forecasts of income statement, balance sheet, and cash flow statement items. Firm-specific cost of equity, cost of debt, weighted average cost of capital, and long-term growth and profitability measures estimated.

Our analysis doesn’t stop there. We also offer a technicalevaluation of the stock as well as other momentumindicators. We not only want to reveal to readers whichfirms may be undervalued, in our view, but we also wantto provide readers with information to help them assessentry and exit points. Most research publishers focus onarriving at a target price or fair value estimate, but mayfall short of providing a technical assessment to bolsterbuy and sell disciplines. We strive to go the distance andprovide readers with answers--not half the story.

An explanation of our approach would not be complete ifwe didn’t describe our ideal stock idea. We’re lookingfor companies that are undervalued--both on a DCF basisand versus peers--have strong growth potential, have asolid track record of creating economic profits forshareholders with reasonable risk, are strong cash flowgenerators, have manageable financial leverage, and arecurrently showing bullish technical and momentumindicators. For dividend growth ideas, we look forcompanies that have both the capacity and willingness tokeep raising the dividend.

Can such stock ideas exist? Subscribe to Valuentum toreceive our best investment ideas and analysis onhundreds of stocks, dividends, ETFs and more.

The firm's stock price is compared to the suggested margin of safety. If a firm's stock price falls below the lower bound of our estimated fair value range, it receives Valuentum's highest Value Rating.

@Valuentum, we strive to stand out from the crowd. Mostinvestment research publishers fall into a few camps,whether it be value, growth, income, momentum, chartistor some variant of the aforementioned. We think each inits own right holds merit, but we think the combination ofthese approaches can be even more powerful. After all,stock price movements aren’t just driven by investors ofthe value or growth variety, but by all market participants.Therefore, we look at stocks from a variety of investmentperspectives in order to better understand and identifyideas. We want to provide relevant information.

The core of our process is grounded in rigorous discountedcash flow analysis and incorporates the concept of amargin of safety. We offer a fair value estimate for eachcompany and provide a relative valuation assessment inthe context of a company’s industry and closest peers. Across section of our ValueCreation™ and ValueRisk™ratings provides a financial assessment of a company’sbusiness quality, while our ValueTrend™ rating offersinsight into the trajectory of a firm’s economic profitcreation. The Economic Castle rating measures themagnitude of future economic value generation, and theDividend Cushion ratio assesses the financial capacity of acompany to keep raising its dividend.

A complete three-stage free cash flow to the firm valuation model generates an estimate of the firm's equity value per share based on estimated future free cash flows.

About Valuentum

Financial Forecasts

Financial Statement Analysis

Discounted Cash Flow Valuation

ModelValueRisk™

Rating

Valuentum Value Rating (VVR)

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VBI Score Action10 Top Pick9 We'd Consider Buying

6 to 8 Constructive (add/trim)3 to 6 Less Exciting (add/trim)1 to 2 We'd Consider Selling

@ Valuentum, we like to look at companies from anumber of different perspectives. The Valuentum BuyingIndex (VBI) combines rigorous financial and valuationanalysis with an evaluation of a stock's technicals to derivea rating between 1 and 10 for each company. The VBIplaces considerable emphasis on a company's discountedcash-flow (DCF) valuation, its relative valuation versuspeers (both forward PE and PEG ratios), and its technicalsin order to help readers assess entry and exit points on themost interesting ideas.

Let's follow the red line on the flow chart below to seehow a company can score a 10, the best mark on the index(a "Top Pick"). First, the company would need to be'undervalued' on a DCF basis and 'attractive' on a relativevalue basis. The stock would also have to be exhibiting

Methodology for Picking Stocks - Valuentum Buying Index™ (VBI)

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

'bullish' technicals. The firm would need aValueCreation™ rating of 'good' or 'excellent', exhibit'high' or 'aggressive' growth prospects, and generate atleast a 'medium' or 'neutral' assessment for cash flowgeneration, financial leverage, and relative price strength.

This is a tall order for any company. Stocks that don'tmake the cut for a 10 are ranked accordingly, with theleast attractive stocks, in our opinion, garnering a ratingof 1 ("We'd sell"). Most of our coverage universeregisters ratings between 3 and 7, but at any given timethere could be large number of companies garneringeither very high or very low scores, especially at marketlows or tops, respectively.

The Best Ideas Newsletter portfolio puts the VBI intopractice.

DCF FairlyValued

DCF Undervalued

Relative ValueUnattractive/Neutral

Relative Value Attractive

Relative ValueUnattractive/Neutral

Relative Value Attractive

Technicals Bearish: 1

Technicals Neutral: 2

TechnicalsBullish: 4

Technicals Bullish: 7

TechnicalsBearish: 6

Technicals >= BullishValueCreation(TM) >= GoodGrowth >= HighCash Flow Generation >= MediumFinancial Leverage <= MediumRelative Strength >= Neutral

Final Score: 10

Technicals Bullish: 9

Technicals Neutral: 8

TechnicalsBearish: 3

Relative Value Unattractive/Neutral

Relative Value Attractive

Technicals Bearish: 3

Technicals Neutral: 6

Technicals Bullish: 7

Technicals Bearish: 3

Technicals Bullish: 6

Technicals Bullish: 7

Technicals Neutral: 5

Technicals Bearish: 4

Technicals Neutral: 4

Initial Index Score

DCF Overvalued

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Investment Style. Valuentum uses its own proprietary stock-classification system.Nano-cap: Less than $50 million; Micro-cap: Between $50 million and $200 million;Small-cap: Between $200 million and $2 billion; Mid-cap: Between $2 billion and$10 billion; Large-cap: Between $10 billion and $200 billion; Mega-cap: Over $200billion. Blend: Firm's that we think are undervalued and exhibit high growthprospects (growth in excess of three times the rate of assumed inflation). Value:Firm's that we believe are undervalued, but do not exhibit high growth prospects.Growth: Firms that are not undervalued, in our opinion, but exhibit high growthprospects. Core: Firms that are neither undervalued nor exhibit high growthprospects.

Company Vitals. In this section, we list key financial information and the sector andindustry that Valuentum assigns to the stock. The P/E-Growth (5-yr), or PEG ratio,divides the current share price by last year's earnings (EPS) and then divides thatquotient by our estimate of the firm's 5-year EPS growth rate. The estimatednormalized diluted EPS and estimated normalized EBITDA represent the five-yearforward average of these measures used in our discounted cash flow model. The P/Eon estimated normalized EPS divides the current share price by estimated normalizeddiluted EPS. The EV/estimated normalized EBITDA considers the current enterprisevalue of the company and divides it by estimated normalized EBITDA. EV is definedas the firm's market capitalization plus total debt, minority interest, preferred stockless cash and cash equivalents.

The information contained in this report is not represented or warranted to be accurate, correct, complete, or timely. This report is for informational purposes only and should not be considered a solicitation to buy or sell a security. Before acting on any information in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Assumptions, opinions, and estimates are based on our judgment as of the date of the report and are subject to change without notice. Valuentum is not responsible for any errors or omissions or for results obtained from the use of this report. Redistribution is prohibited without written permission. To license Valuentum research, contact us at [email protected].

Estimated Fair Value. This measure is our opinion of the fair equity value per share ofthe company. If our forecasts prove accurate, which may not always be the case, wemay expect a firm's stock price to converge to this value within the next 3 years.

Fair Value Range. The fair value range represents an upper bound and lower bound,between which we would consider the firm to be fairly valued. The range considers ourestimate of the firm's fair value and the margin of safety suggested by the volatility ofkey valuation drivers, including revenue, gross margin, earnings before interest, andenterprise free cash flow (the determinants behind our ValueRisk™ rating).

ValueCreation™. This is a proprietary Valuentum measure. ValueCreation™indicates the firm's historical track record in creating economic value for shareholders,taking the average difference between ROIC (without goodwill) and the firm'sestimated WACC during the past three years. The firm's performance is measured alongthe scale of EXCELLENT, GOOD, POOR, and VERY POOR. Those firms withEXCELLENT ratings have a demonstrated track record of creating economic value,while those that register a VERY POOR mark have been destroying economic value.

ValueRisk™. This is a proprietary Valuentum measure. ValueRisk™ indicates thehistorical volatility of key valuation drivers, including revenue, gross margin, earningsbefore interest, and enterprise free cash flow. The standard deviation of each measure iscalculated and scaled against last year's measure to arrive at a percentage deviation foreach item. These percentage deviations are weighted equally to arrive at thecorresponding fair value range for each stock, measured in percentage terms. The firm'sperformance is measured along the scale of LOW, MEDIUM, HIGH, and VERY HIGH.The ValueRisk™ rating for each firm also determines the fundamental beta of eachfirm along the following scale: LOW (0.85), MEDIUM (1), HIGH (1.15), VERY HIGH(1.3).

ValueTrend™. This is a proprietary Valuentum measure. ValueTrend™ indicates thetrajectory of the firm's return on invested capital (ROIC). Firms that earned an ROIClast year that was greater than the 3-year average of the measure earn a POSITIVErating. Firms that earned an ROIC last year that was less than the 3-year average of themeasure earn a NEGATIVE rating.

Business Quality Matrix. We compare the firm's ValueCreation™ and ValueRisk™ratings. The box is an easy way for investors to quickly assess the business quality ofa company. Firms that generate economic profits with little operating variabilityscore near the top right of the matrix.

Return on Invested Capital. At Valuentum, we place considerable emphasis onreturn on invested capital (both with and without goodwill). The measure focuses onthe return (earnings) the company is generating on its operating assets and is superiorto return on equity and return on assets, which can be skewed by a firm's leverage orexcess cash balance, respectively.

Range of Potential Outcomes. The firm's margin of safety is shown in the graphicof a normal distribution. We consider a firm to be undervalued if its stock price fallsalong the green line and overvalued if the stock price falls along the red line. Weconsider the firm to be fairly valued if its stock price falls along the yellow line.

Money Flow Index (MFI). The MFI is a technical indicator that measures buyingand selling pressure based on both price and volume. Traders typically use thismeasure to identify potential reversals with overbought and oversold levels. We use a14-week measure to rank firms along the following scale: EXTREMELYOVERBOUGHT (>90), OVERBOUGHT (80-90), NEUTRAL (20-80), OVERSOLD(10-20), EXTREMELY OVERSOLD (0-10).

Relative Value. We compare the firm's forward price-to earnings (PE) ratio and itsprice/earnings-to-growth (PEG) ratio to that of its peers. If both measures fall below thepeer median, the firm receives an ATTRACTIVE rating. If both are above the peermedian, the firm receives an UNATTRACTIVE rating. Any other combination resultsin a NEUTRAL rating.

Cash Flow Generation. Firms' cash flow generation capacity are measured along thescale of STRONG, MEDIUM, and WEAK. A firm with a 3-year historical free cashflow margin (free cash flow divided by sales) greater than 5% receives a STRONGrating, while firms earning less than 1% of sales as free cash flow receive a WEAKrating.

Financial Leverage. Based on the firm's normalized debt-to-EBITDA metric, we rank firms on the following scale: LOW, MEDIUM, and HIGH. Companies with a normalized debt-to-EBITDA ratio below 1.5 receive a LOW score, while those with a measure above 3 receive a HIGH score.

Timeliness Matrix. We compare the company's recent stock performance relative tothe market benchmark with our assessment of its valuation. Firms that areexperiencing near-term stock price outperformance and are undervalued by ourestimate may represent timely buys.

Stock Price Relative Strength. We assess the perfomance of the company's stockduring the past quarter, 13 weeks, relative to an ETF that mirrors the aggregateperformance of constituents of the stock market. Firms are measured along the scaleof STRONG, NEUTRAL, and WEAK. Companies that have outperformed themarket index by more than 2.5% during this 13-week period receive a STRONGrating, while firms that trailed the market index by more than 2.5% during this 13-week period receive a WEAK rating.

Glossary

Technical Evaluation. We evaluate a firm's near-term and medium-term movingaverages and money flow index (MFI) to assign each firm a rating along thefollowing scale: VERY BULLISH, BULLISH, NEUTRAL, BEARISH, and VERYBEARISH.

DCF Valuation. We opine on the firm's valuation based on our DCF process. Firmsthat are trading with an appropriate discount to our fair value estimate receive anUNDERVALUED rating. Firms that are trading within our fair value range receive aFAIRLY VALUED rating, while firms that are trading above the upper bound of ourfair value range receive an OVERVALUED rating.

Upside/Downside Volume. Heavy volume on up days and lower volume on down days suggests that institutions are heavily participating in a stock's upward advance. We use the trailing 14-week average of upside and downside volume to calculate an informative ratio. We rank each firm's U/D volume ratio along the following scale: BULLISH, IMPROVING, DETERIORATING, and BEARISH.

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F Rating History Price Fair Value VBI3-Feb-22 $20.61 $19.00 31-Nov-21 $19.29 $16.00 614-May-21 $11.84 $11.00 315-Jan-21 $9.83 $10.00 67-Oct-20 $7.23 $4.00 419-Jun-20 $6.23 $6.00 716-Sep-19 $9.30 $10.00 418-Feb-19 $8.83 $12.00 717-Sep-18 $9.58 $13.00 411-May-18 $11.19 $14.00 719-Jan-18 $12.00 $15.00 422-Sep-17 $11.84 $15.00 716-Jun-17 $11.22 $15.00 417-Feb-17 $12.58 $16.00 6

Copyright (c) 2017 by Valuentum, Inc. All rights reserved.No part of this publication may be reproduced in any form or by any means.The information contained in this report is not represented or warranted to be accurate, correct,complete, or timely. This report is for informational purposes only and should not be considered asolicitation to buy or sell any security. No warranty or guarantee may be created or extended bysales or promotional materials, whether by email or in any other format. The securities or strategiesmentioned herein may not be suitable for all types of investors. The information contained in thisreport does not constitute any advice, especially on the tax consequences of making any particularinvestment decision. This material is not intended for any specific type of investor and does nottake into account an investor's particular investment objectives, financial situation or needs. Thisreport is not intended as a recommendation of the security highlighted or any particular investmentstrategy. Before acting on any information found in this report, readers should consider whethersuch an investment is suitable for their particular circumstances, perform their own due-diligence,and if necessary, seek professional advice. The sources of the data used in this report are believed by Valuentum to be reliable, but the data’saccuracy, completeness or interpretation cannot be guaranteed. Assumptions, opinions, andestimates are based on our judgment as of the date of the report and are subject to change withoutnotice. Valuentum is not responsible for any errors or omissions or for results obtained from the useof this report and accepts no liability for how readers may choose to utilize the content. In no eventshall Valuentum be liable to any party for any direct, indirect, incidental, exemplary, compensatory,punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, withoutlimitation, lost income or lost profits and opportunity costs) in connection with any use of theinformation contained in this document. Investors should consider this report as only a single factorin making their investment decision. Valuentum is not a money manager, is not a registered investment advisor, and does not offerbrokerage or investment banking services. Valuentum has not received any compensation from thecompany or companies highlighted in this report. Valuentum, its employees, independentcontractors and affiliates may have long, short or derivative positions in the securities mentionedherein. Information and data in Valuentum’s valuation models and analysis may not capture allsubjective, qualitative influences such as changes in management, business and political trends, orlegal and regulatory developments. Redistribution is prohibited without written permission. Readersshould be aware that information in this work may have changed between when this work waswritten or created and when it is read. There is risk of substantial loss associated with investing infinancial instruments. Valuentum's company-specific forecasts used in its discounted cash flow model are rules-based.These rules reflect the experience and opinions of Valuentum's analyst team. Historical data used inour valuation model is provided by Xignite and from other publicly available sources includingannual and quarterly regulatory filings. Stock price and volume data is provided by Xignite. Nowarranty is made regarding the accuracy of any data or any opinions. Valuentum's valuation modelis based on sound academic principles, and other forecasts in the model such as inflation and theequity risk premium are based on long-term averages. The Valuentum proprietary automated text-generation system creates text that will vary by company and may often change for the samecompany upon subsequent updates. Valuentum uses its own proprietary stock investment style and industry classification systems. Peercompanies are selected based on the opinions of the Valuentum analyst team. Research reports anddata are updated periodically, though Valuentum assumes no obligation to update its reports,opinions, or data following publication in any form or format. Performance assessment ofValuentum metrics, including the Valuentum Buying Index, is ongoing, and we intend to updateinvestors periodically, though Valuentum assumes no obligation to do so. Not all information isavailable on all companies. There may be a lag before reports and data are updated for stock splitsand stock dividends. Past simulated performance, whether backtested or walk-forward or other, is not a guarantee offuture results. For general information about Valuentum's products and services, please contact usat [email protected] or visit our website at www.valuentum.com.

The High Yield Dividend Newsletter portfolio, the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the Nelson Exclusive publication, is hypothetical and does not represent actual trading. Past performance is not a guarantee of future results.

Valuentum is an investment research publishing company.

Valuentum has not owned and does not own any shares of stocks mentioned on its website or in this report. President of Investment Research Brian Nelson does not own any shares of stocks mentioned on Valuentum's website or in this report. Majority share owner of Valuentum, Elizabeth Nelson, currently has exposure to HON in her retirement account.

If an independent contributor or employee mentions a stock he or she owns, we disclose it in the article/report that mentions the security. Please view individual articles on Valuentum's website for additional disclosures. Contact us to learn more about Valuentum's editorial policies.

Affiliate RelationshipCustomers of Valuentum acknowledge and agree that Valuentum’s affiliate, Pigeon Oak Capital Management, LLC (“Advisor”), may act as an investment advisor to other clients and receive fees for such services. The advice given and the actions taken with respect to such clients and Advisor’s own account may differ from opinions or the timing and nature of action taken with respect to Valuentum’s ratings or published research. Customers of Valuentum must further recognize that transactions in a specific security are not completed for Valuentum customers’ accounts because Valuentum does not have the authority to make trades or provide personalized advice for newsletter clients. The Advisor has discretion to make trades in its clients’ accounts without receiving prior authorization in each instance. Valuentum’s customers also acknowledge that in managing the Advisors’ clients’ assets, Advisor may purchase or sell securities in which Valuentum has an opposite opinion on, and Advisor, its members, officers, directors, or employees, directly or indirectly, have or may acquire a position or interest that contradicts that of Valuentum’s opinion. Due to the fiduciary relationship between Advisor and its clients, Valuentum’s customers will not receive alerts of trades done by Advisor, and trades done by Valuentum’s customers based on opinions of Valuentum might lag trades done by Advisor’s clients. Advisor or its affiliated persons may obtain material, nonpublic or other confidential information that, if disclosed, might affect an investor’s decision to buy, sell or hold a security. Under applicable law, Advisor or Valuentum and their affiliated persons cannot improperly disclose or use this information for their personal benefit or for the benefit of any person, including clients of Advisor or customers of Valuentum. If Advisor or any affiliated person obtains nonpublic or other confidential information about any issuer, Valuentum will have no obligation to disclose the information to customers of it, clients of Advisor or use it for their benefit.

To send us feedback or if you have any questions, please contact us at [email protected]. We're always looking for ways to better serve your investment needs and improve our research.

Disclosures, Disclaimers & Additional Sources

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