Ford Motor Co. (NYSE: F) reported February sales fell 1.9% year over year, versus a projected increase of 5.2%. Investors were obviously disappointed, and the stock price fell 3.8% after the sales conference call. Besides the disappointing sales data for February, Ford also recently backed off its projection of losing only $250 million in Europe this year, now only saying that it will lose less than it did in 2014, when it lost $1 billion. I Know First has been bullish for Ford over the past few months, as can be seen in articles posted in December and January. The recent news might cause investors to lose faith in this dividend stock, but we continue to be bullish for this iconic American automotive company, believing that its international efforts continue to be promising for the future despite external setbacks, the newly revamped F-150 will be a hit among consumers, and that the company is currently greatly undervalued.

Efforts In Europe and China Promising

Ford’s operations in Europe have been hit hard by the financial situation in Russia, which appears headed towards a recession after a plunge in the ruble’s value. Sanctions imposed by the US and the European Union over Russia’s conflict over the Crimean Peninsula in Ukraine have further hindered the country’s economy, hurting auto sales. The auto industry expects sales in Russia to fall to just 1.8 million units in 2015, a 27% decline over last year and nearly 40% below the level in 2012.

This negative outlook caused Ford to lower its European outlook, saying losses would be larger than the $250 million it had previously projected. But the news in Europe is not all bad, as the company is still laying the groundwork for success on the continent for 2016 and beyond. Ford has made progress in cutting losses in Europe through reducing factory capacity and strengthening the company’s brand with new models.

The progress can be seen in the rest of Europe, as Ford’s sales rose 9.8% in January compared to a year earlier. This outpaced the industry growth of 6.5%, and was driven by the all-new Mondeo, whose sales rose 29% year-over-year. The company plans to introduce 25 new or refreshed models over the next five years, and its investment in new technologies and products seems to be paying off.

Ford is also making progress in ramping up its European operations. The company announced that it will be able to manufacture 450,000 units a year in its production facility in Valencia, Spain, and will be able to produce 400,000 units over the rest of 2015. This will raise the company’s production capacity by 40%, allowing Ford to accelerate its growth in Europe and around the world.

Increased production capacity will also help the company in China. Ford opened a third assembly plant in China in November of 2014, which will increase its production capacity in the region by 360,000 units per year. It also expects to open a fourth plant this year, further increasing capacity. Ford had experienced tremendous growth in China until capacity restraints caused sales growth to slump during the second half of last year. With the increased capacity, Ford returned to double digit growth, with sales growing by 19% in January. As a result of the added capacity, the company should be able to grow sales by over 50% and reach sales figures of around 1.7 million to 1.8 million in 2015.

F-150 Sales Will Rebound In Second Half Of Year

Sales of Ford’s F-150 and the F-series trucks were down 1% in February, contributing to the fall in total car sales for the company in the same month. The F-150 has been remodeled for 2015, using aluminum parts to make the car much lighter and improve performance. Downtime at two assembly plants to retool for the new models have caused at least 90,000 fewer trucks being produced since mid-2014.

Ford has had a limited number of trucks to sell for the last nine months, but this is all part of Ford’s plan. Its dealers should be fully stocked by June, and the truck should be a winner among consumers. It already has been the most popular truck for the better part of three decades, and the lighter frame will improve the truck’s handling, towing capacity, and gas mileage. Ford has also not been pushing its 2014 models off of the lot with incentives, as many companies do to make room for newer models, because of the decreased capacity. This has kept average selling prices higher.

Currently, Ford’s Dearborn Truck Plant is the sole source of new trucks right now. This plant was retooled last year, while a second plant in Kansas City, Missouri did the bulk of its retooling at the beginning of this year. This plant is set to finish its changes by the end of March, and production should ramp up at that point. In the meantime, some figures for sales of the F-150 are promising. The new model of the truck is staying on dealer lots for an average of only 18 days, much lower than the 70 days that the average truck remains on the lot.

The F-150 is the profit driver for the company, and its success in the second half of the year will be an enormous positive for the company’s performance. Its sales are watched more closely than most models, and the stock price will rise higher when dealers are fully stocked by this summer. If and when consumers start buying the vehicle in droves, investor sentiment for Ford will skyrocket, especially if its troubles in Europe, largely driven by Russia, are alleviated by that time.

Algorithmic Analysis

Ford currently has a forward P/E ratio of just 10.08, well below the current estimated forward P/E ratio of the rest of the market as a whole, which is closer to 20. This lower price valuation probably takes the company’s struggles in Europe into account, and the stronger performance to come in future years will cause the stock to move higher. The strong performance of the F-150 later this year will cause the stock price to move higher, as well. The fundamental analysis of the company so far clearly points to the stock price increasing in the future, and some algorithmic analysis supports this presumption.

We utilize an advanced self-learning algorithm to analyze, model and predict the stock market. The algorithm predicts the flow of money in almost 2000 markets across a range of time frames (e.g., 3-day, 1-month, 1-year). The algorithm’s predictability becomes stronger in the 1-month, 3-month, and 1-year horizons, so it is particularly useful as a long investment tool, although it can also be used for intraday trading.

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We have successfully predicted Ford’s outcomes in the past. For example, in aone-month forecast running from January 29th, 2015 to March 1st, 2015, I Know First predicted that Ford would be one of the ten best performing dividend stocks during that time period; the stock held true to this prediction for a return of 13.00%. As the algorithm has had success predicting Ford’s behavior in the past, its current forecasts could be very useful for forecasting its performance during the rest of 2015.

The new 3-month and 1-year forecasts for Ford, generated by the I Know First algorithm and updated on March 4th, are shown below. Bright green signifies a highly bullish signal; light green also indicates that the forecast is bullish, but not as strongly so. Bright red, in turn, signifies a bearish forecast; correspondingly, light red indicates a bearish forecast as well, though not as negative. Each compartment contains two numbers: the strength of the signal itself (represented by the number in the middle of each box, to the right), and its predictability (found in the bottom left corner, this is the approximate level of confidence our service has in the forecast).

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The signal strengths in these forecasts are very bullish for Ford, as they are dark green and included in the top dividend stock picks. It is important to note that the signal strength is not a predicted price or percentage, but indicates a trend. In this case, Ford is strongly bullish. Now is a good time to buy into the company for long-term investors, as the company’s low valuation, promising progress in Europe, and ramped up sales of the F-150 in the second half of the year will drive the stock price higher.