After Earnings, Is Ford Stock a Buy, a Sell, or Fairly Valued?

Ford Motor released its fiscal first-quarter earnings report on April 29. Here’s Morningstar’s take on Ford’s earnings and stock.

Key Morningstar Metrics for Ford Motor

• Fair Value Estimate
  : $18.00
• Morningstar Rating
  : ★★★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : High

What We Thought of Ford Motor’s Fiscal Q1 Earnings

Ford Motor’s first-quarter adjusted diluted EPS of $0.66 far exceeded the $0.19 LSEG consensus, partly due to cost control but also due to a $1.3 billion noncash tariff benefit from the US Supreme Court invalidating tariffs imposed under the International Emergency Economic Powers Act.

Why it matters: Management raised 2026 adjusted EBIT guidance by $500 million on each end to $8.5 billion-$10.5 billion. This guidance assumes no US recession or Iran war losses, but assumes about $1 billion in new commodity headwinds from rising aluminum prices.

• A higher aluminum cost is separate from the cost of imported aluminum (and tariffed) due to the Novelis plant fire last year. Ford says the Novelis mill should restart in May, but will need time to ramp up volume. Ford has secured a contingent supply of aluminum if the restart falters.
• Full-year tariff cost guidance remains about $1 billion, excluding the court ruling and Novelis costs. With higher commodity costs of $1 billion negating most of the IEEPA benefit, Ford’s guidance increase is driven by higher software subscription revenue and warranty cost cuts.

The bottom line: We maintain our $18 per share fair value estimate and no-moat rating. We continue to believe Ford has finally turned a corner on better managing costs for materials and warranty, while not selling boring vehicles. Better cost consistency suggests future positive earnings surprises.

• Off-road trims were nearly 25% of the US unit mix in the quarter, and paid commercial subscriptions at Ford Pro rose 30% year over year to 879,000. These subscriptions are higher-margin than selling vehicles, and off-road trims tempt customers beyond entry-level trims, which is good for pricing.
• We see Ford with plenty of liquidity to weather a recession should high gas prices eventually cause a large decline in US vehicle demand for Ford’s pickup trucks and SUVs. Automotive cash and securities were about $22 billion as of March 31, and total automotive liquidity was $43.1 billion.

Fair Value Estimate for Ford Motor

With its 4-star rating, we believe Ford’s stock is moderately undervalued compared with our long-term fair value estimate of $18. The change is from modeling more revenue and higher average profitability throughout our five-year explicit forecast period, as well as higher book value for Ford Credit and less underfunded pension. 2025 results suggest that Ford may have finally figured out how to meaningfully reduce its cost base, excluding tariffs, with $1.5 billion of reduction in 2025 and another $1 billion expected in 2026.

Read more about Ford Motor’s fair value estimate.

Economic Moat Rating

Ford does not have a moat, and we do not expect that to change, as there are too many obstacles to deal with at once. Vehicle manufacturing is a capital-intensive business, but barriers to entry are not as high as in the past. The industry is already full of strong competition, so it is nearly impossible for one firm to gain a durable advantage over another.

Foreign automakers from China may soon enter developed markets such as the United States, as they already have in Europe. South Korea’s Hyundai and Kia, as well as Tesla, have become formidable competitors. Nascent EV makers like Rivian and Lucid could also become a formidable threat if they survive. Furthermore, the auto industry is so cyclical that in bad times, even the best automakers cannot avoid large declines in return on invested capital and profit. Cost-cutting helps ease the pain, but it does not restore all lost profit. Consumers also have no switching costs when buying their next vehicle.

Read more about Ford Motor’s economic moat.

Financial Strength

Year-end 2025 global pension underfunding totaled about $192 million compared with about $8.2 billion at year-end 2015, while salaried employee retiree healthcare adds another $4.4 billion of shortfall. Nearly all underfunding is from pay-as-you-go plans (mostly from Germany and US senior management plans) that are always unfunded and pay benefits paid from general corporate cash. Management often guides funded plan contributions to be limited to annual service costs. 2026 funded plan contributions are guided to about $550 million, plus about $400 million of benefit payments for unfunded plans. Unfunded plan benefit payments will likely be around $400 million annually in our view. Comments at analyst days indicate that share repurchases are possible but will probably be done only to offset dilution from stock options.

Read more about Ford Motor’s financial strength.

Risk and Uncertainty

Our Uncertainty Rating for Ford is High. Ford has spent tens of billions since 2022 betting consumers will switch to electric vehicles, and a lot of capital was wasted once that adoption proved too slow following regulatory changes in the US. Barriers to entry are declining as a growing global market reduces fixed costs as a percentage of sales for new entrants. Macroeconomic conditions, rising interest rates, commodity prices, and trade agreements and tariff changes in key markets, such as the US, Europe, and China, can quickly derail management’s own plans and guidance, while significant disruption is on the horizon as vehicles become more high-tech and autonomous.

Ford’s union relationships historically have been better than those of General Motors GM. However, UAW President Shawn Fain in 2023 said Ford and the UAW are no longer working together as a team. We are concerned about a very long strike in May 2028 because the UAW wants to resume pensions and retiree healthcare for all its workers, something we don’t see as affordable. One of the largest environmental, social, and governance risks we see with Ford is increasing regulatory scrutiny on combustion vehicles, but electric vehicles such as the Mach-E and the now-discontinued F-150 Lightning show Ford is serious about switching away from combustion, and the US regulatory environment is not as severe as it had been.

Read more about Ford Motor’s risk and uncertainty.

F Bulls Say

• Ford’s turnaround will take lots of time due to many restructuring projects around the world, but partnerships like Renault may help share cost burdens, and the Model e is expected to be profitable in 2029.
• Ford is focusing its investments where it gets the best return, which is why mostly exiting North American car segments and production in South America was the right move, in our opinion.
• Software and data services for fleet customers are a new and lucrative margin stream for Ford compared with just selling the vehicle.

F Bears Say

• The auto industry is very cyclical, and at times, Detroit automakers have lost significant US market share to foreign automakers for years. Competition has never been fiercer.
• Long-term profitability could be hindered by unions, which have recently become more powerful. Major nonunionized import automakers in the US mostly do not have this problem for now.
• Ford’s stock can sell off heavily on macroeconomic fears, even if the company itself is doing well. Furthermore, it takes significant investment to fund growth in the auto industry, which limits potential margin expansion.

This article was compiled by Jillian Moore.