Ford Motor Company (F 0.41%), a longtime staple in the auto industry, is a household name that investors are certainly familiar with. The shares, however, haven't made for a great investment. As of this writing, they are up just 30% in the last five years, less than half the gain of the S&P 500. But Ford's current price-to-earnings ratio of 7.3 and dividend yield of 5.3% might be too enticing to pass up.

If you're interested in buying this auto stock, though, you can't ignore these three negative factors. Here's what you need to know.

1. It has unimpressive financials

This company has been around since 1903, making Ford a legacy car manufacturer that has one of the longest histories in corporate America. You might find that impressive, adding to Ford's durability, but this business operates in an extremely mature industry. Vehicle unit sales in the U.S. are essentially flat compared to a decade ago.

That translates to weak growth prospects. In the 10-year period between 2012 and 2022, Ford's total revenue increased at a compound annual rate of just 1.6%. And from 2022 to 2027, consensus analyst estimates think the business will post annualized sales gains of 4.1%. That would be better than the past, but still isn't much to get excited about.

Another unattractive quality pertaining to Ford's financials is weak profitability. In the last decade, the company's operating margin has averaged a measly 7.5%. In fact, there hasn't been any clear indicator of margin expansion over the long term, which should worry investors.

This is a very capital-intensive business. Building factories, designing new automobiles, paying salaries and benefits for a massive workforce, spending on raw materials, and marketing to customers is very expensive. And there's no reason to believe this is going to change.

2. Its EVs are struggling

The transition to electric vehicles (EVs) is an ongoing shift, and Ford is aiming to be a leader. With the Model e division, the company is fully focused on ramping up its production capabilities in the coming years.

The issue, however, is that Ford's EV segment is burning through cash. In just the last quarter, Model e posted an operating loss of $1.3 billion. This was despite revenue growing by 26% year over year. No advantages to scale are apparent yet.

Making matters worse, and a possible sign that investors should be patient for things to improve, management has decided to delay about $12 billion in EV-related investments. Lower demand and rising costs are reasons to be a bit more cautious with these capital outlays.

There is a reason for investors to stay somewhat positive, though. Sales of Ford's popular EV models, the F-150 Lightning pick-up truck and the Mustang Mach-E, are a bright spot. The business can clearly rely on well-known car models to drum up interest as it relates to growth in the EV segment.

3. The competition is intense

The auto industry is one of the most competitive around. Think about it from the customer's perspective: There are a seemingly unlimited number of companies to choose from, all trying to compete on price, design, features, quality, and performance.

This means Ford likely doesn't benefit from an economic moat. Yes, the brand might be well known, but there are countless other automakers both domestically and in foreign markets that might have even greater recognition.

Furthermore, Ford hasn't shown any ability to develop economies of scale, as its disappointing margins trends attest to.

The incredibly competitive industry landscape makes it that much more difficult in regard to the two prior points I made. There's no reason to believe that Ford will be able to post growth that's meaningfully better than what we've seen over the past decade. And when it comes to EVs, the fact that nearly every automaker is focused on this area will make it harder for Ford to sell more units and become profitable in this segment.

Value-focused and income-seeking investors might still rush to buy this stock. But it's best not to ignore these three red flags.