Amid market volatility following tariff announcements, Ford stock (NYSE:F) stock is up about 4% year-to-date, while its peer – GM stock – has declined 8%. We believe Ford’s consistent financial performance and attractive 7x 2025 earnings valuation indicate further upside potential.
Ford stock looks risky – but a good pick to buy at its current price of around $10. We believe there are several major concerns with F stock, which makes it risky despite its current valuation being extremely low.
We arrive at our conclusion by comparing the current valuation of F stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of Ford Motor along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a very weak operating performance and financial condition, as detailed below. However, for investors who seek lower volatility than individual stocks, the Trefis High-Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.
How does Ford Motor’s valuation look vs. the S&P 500?
Going by what you pay per dollar of sales or profit, F stock looks very cheap compared to the broader market.
• Ford Motor has a price-to-sales (P/S) ratio of 0.2 vs. a figure of 3.2 for the S&P 500
• Additionally, the company’s price-to-operating income (P/EBIT) ratio is 7.3 compared to 24.3 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 2.5 vs. the benchmark’s 24.3
How have Ford Motor’s revenues grown over recent years?
Ford Motor’s Revenues have grown marginally over recent years.
• Ford Motor has seen its top line grow at an average rate of 10.8% over the last 3 years (vs. increase of 6.3% for S&P 500)
• Its revenues have grown 5.0% from $176 Bil to $185 Bil in the last 12 months (vs. growth of 5.2% for S&P 500)
• Also, its quarterly revenues grew 4.9% to $48 Bil in the most recent quarter from $46 Bil a year ago (vs. 5.0% improvement for S&P 500)
How profitable is Ford Motor?
Ford Motor’s profit margins are worse than most companies in the Trefis coverage universe.
• Ford Motor’s Operating Income over the last four quarters was $5.2 Bil, which represents a poor Operating Margin of 2.8% (vs. 13.0% for S&P 500)
• Ford Motor’s Operating Cash Flow (OCF) over this period was $15 Bil, pointing to a moderate OCF-to-Sales Ratio of 8.3% (vs. 15.7% for S&P 500)
Does Ford Motor look financially stable?
Ford Motor’s balance sheet looks weak.
• Ford Motor’s Debt figure was $161 Bil at the end of the most recent quarter, while its market capitalization is $39 Bil (as of 3/17/2025). This implies a very poor Debt-to-Equity Ratio of 424.1% (vs. 19.0% for S&P 500). [Note: A lower Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $38 Bil of the $285 Bil in Total Assets for Ford Motor. This yields a moderate Cash-to-Assets Ratio of 13.4% (vs. 14.8% for S&P 500)
How resilient is Ford Motor stock during a downturn?
Ford Motor stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on F stock? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• Ford Motor stock fell 56.5% from a high of $25.19 on 17 January 2022 to $10.95 on 28 December 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $15.35 on 5 July 2023 and currently trades at around $9.90
Covid Pandemic (2020)
• Ford Motor stock fell 50.1% from a high of $8.03 on 20 February 2020 to $4.01 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 22 October 2020
Global Financial Crisis (2008)
• Ford Motor stock fell 86.3% from a high of $9.20 on 14 October 2007 to $1.26 on 19 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 December 2009
Putting all the pieces together: What it means for Ford Motor stock
In summary, Ford Motor’s performance across the parameters detailed above are as follows:
• Growth: Neutral
• Profitability: Weak
• Financial Stability: Very Weak
• Downturn Resilience: Very Weak
• Overall: Weak
While the stock’s weak fundamentals might suggest inherent risk, we believe Ford stock presents a buying opportunity, supported by its low valuation.
While Ford Motor stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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