Ford stock is undervalued thanks to fiscal mismanagement at GM.

As of the writing of this post, Ford stock is $7.88 per share. I think it's undervalued, and here's why:

1) Positive net income: Earnings per share was either $1.12 or $1.15 in 2005 (depending on whether you read Yahoo or MSN) This puts the trailing P/E ratio at ~7.

2) Projected future positive net income: Analyst concensus on EPS for FY06 is ~$0.59. FY07 is ~$0.71.

3) High dividend payout: 0.40 per share in 2005, or 35% of EPS.

The bottom line is that they are making money are likely to continue making money. While the extensive borrowing is troubling, they are making much more drastic moves to reduce expensives than GM.

I strongly believe that GM will file for bankruptcy in the next year to 18 months. If Ford continues to act as a healthy dividend paying company, I think this will be a huge opportunity for sales growth for them.