Key Stats for Ford Stock
- 6-Month Performance: 23%
- 52-Week Range: $8 to $15
- Valuation Model Target Price: $17
- Implied Upside: 8%
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What Happened?
Ford Motor Company stock is up about 23% over the last six months, recently trading near $14 per share as investors responded to improving earnings visibility and a clearer 2026 profit outlook.
The rally reflects growing confidence that Ford can expand profits in 2026 after guiding for $8 billion to $10 billion in adjusted EBIT and $5 billion to $6 billion in adjusted free cash flow, signaling meaningful improvement from 2025 levels.
Investors reacted positively to expectations for about $1 billion lower tariff costs year over year and another $1 billion in industrial cost improvements, which reduce downside risk and strengthen margin stability.
The stock moved higher after Ford reported $187 billion in full-year 2025 revenue, $6.8 billion in adjusted EBIT, and $3.5 billion in free cash flow.
CEO Jim Farley said, “the earnings power of our business is accelerating,” highlighting Ford Pro’s more than $66 billion in revenue and $6.8 billion in EBIT as a durable profit engine.
Recent filings showed active institutional positioning. LSV Asset Management trimmed its stake by 428,900 shares in Q3, while ABN Amro Investment Solutions reduced its position by 64.9%.
Meanwhile, ProShare Advisors increased its stake by 96%, and ING Groep NV raised its holdings by more than 2,400%.
Institutions collectively own about 58.74% of Ford shares, reflecting continued engagement from large investors.
However, management reaffirmed its $0.15 per share quarterly dividend declared last week and emphasized profit improvement driven by richer truck mix, Ford Pro growth, and narrowing Model e losses heading into 2026.
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Is Ford Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 2.4%
- Operating Margins: 5.9%
- Exit P/E Multiple: 7.6x
Revenue growth reflects a modest expansion profile, with analyst estimates rising from $174.0 billion in 2025 to $187.1 billion by 2028, consistent with roughly 2.4% annual growth.
The mix shift toward higher-margin Super Duty, performance trims, and Ford Pro commercial contracts supports revenue quality even in a largely flat industry environment.
Operating margins near 6% assume continued strength in Ford Blue and Ford Pro, combined with gradual improvement in Model e losses as cost reductions, improved battery sourcing, and lower tariff expenses stabilize profitability.
Management expects about $1 billion in lower tariff costs and another $1 billion in industrial cost improvements in 2026, reinforcing the margin outlook.
Based on these inputs, the valuation model estimates a target price of $17.38, implying about 23.1% total upside over the next 2.9 years and a 7.5% annualized return.
Under the framework where upside above 6% qualifies as undervalued, the stock appears undervalued at current levels.
Results over the next year hinge on execution in several higher-impact areas. Ford Pro expansion, sustained pricing power in Super Duty and performance trims, continued growth in software and physical services, and disciplined capital allocation remain central to earnings durability.
At current levels, Ford appears undervalued, with future performance driven more by margin stability, free cash flow generation, and capital allocation discipline than by aggressive top-line growth.
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