Ford Earnings: Investment Story Continues to Look More Favorable Than in the Past

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 Earnings

Ford Motor’s F 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 Ford 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.