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Ford Stock Looks Cheap at 0.26X P/S - But is It Worth Buying?
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Key Takeaways
Ford's 0.26X forward P/S is below its 5-year average and peers GM and Tesla despite a YTD stock gain.
Ford Pro's strong demand, paid software growth and Super Duty launch drive optimism for future earnings.
EV losses, ICE slowdown and $1.5B in tariff impact weigh on Ford's 2025 earnings outlook and estimates.
U.S. legacy automaker Ford (F - Free Report) is currently trading at a 0.26 forward 12-month price-to-sales (P/S) ratio, below the industry levels as well as its own 5-year average. The valuation also stacks up favorably against its closest peer, General Motors (GM - Free Report) , and the electric vehicle giant, Tesla (TSLA - Free Report) . General Motors has a P/S of 0.27X, while Tesla is trading at a much loftier 9.88X multiple. Of course, Tesla’s valuation is less tied to current fundamentals and more driven by optimism around unproven future bets, like robotaxis and artificial intelligence.
Image Source: Zacks Investment Research
Ford looks undervalued despite the stock rising roughly 7% year to date against the industry’s loss of more than 19%. Over the same timeframe, shares of General Motors have declined almost 10%, and Tesla slid 20%.
YTD Price Performance Comparison
Image Source: Zacks Investment Research
With Ford’s valuation looking cheap, the real question now is whether Ford has the momentum and fundamentals to deliver a real upside from here.
Factors That Could Drive Ford’s Growth
Ford remains a key player in the U.S. auto market, with a lineup that continues to resonate with American buyers. The F-Series trucks continue to be a best-seller, and models like the Maverick pickup, Escape, Explorer, Expedition, and Edge keep Ford well-positioned in the SUV and crossover space.
One of the major key catalysts for Ford currently is its Ford Pro business, which is focused on commercial customers. The combination of Ford Pro's strong order books, increasing demand signals and the successful launch of the all-new Super Duty sets the stage for a highly promising future for the Ford Pro segment. The growing interest in its software and service offerings is also driving the unit’s earnings. The segment has around 675,000 paid software subscriptions, with strong ARPU growth driving incremental revenues. Software services also serve as a countercyclical measure for the segment.
Ford’s healthy balance sheet and investor-friendly moves instill investor confidence. The company ended the first quarter of 2025 with roughly $45 billion in liquidity, including around $27 billion in cash. Its superior liquidity profile provides a solid foundation for investment in Ford+ priorities. Encouragingly, Ford is on track to deliver $1 billion in net cost reductions this year, excluding tariff effects.
Ford’s dividend yield of over 5% stands out as an attractive option for income-focused investors, especially when stacked against the S&P 500’s average yield of just more than 1%. With plans to return 40-50% of its free cash flow to shareholders, Ford underscores its commitment to rewarding investors, even as it navigates a major transformation of its business.
Challenges in Ford’s Path
Ford’s EV business is under pressure. Its Model-e segment is bearing the brunt of stiff competition, pricing pressure and significant costs associated with new-generation EV development. After having incurred losses of $4.7 billion in its EV business in 2023, Ford’s loss from Model-e widened to $5.07 billion in 2024, exacerbated by ongoing pricing pressure and increased investments in next-generation EVs. The company is expected to incur huge losses in its EV business this year as well.
The Ford Blue division seems to be losing momentum. Ford expects to sell fewer ICE vehicles compared to last year. Additionally, a shift in product mix and foreign exchange headwinds will drag profits.
The automaker is bracing for tariff-related headwinds as well. The full impact of shifting tariffs and potential retaliatory measures on the auto supply chain remains uncertain across the industry. In this context, Ford has projected a net negative impact of approximately $1.5 billion on its adjusted EBIT in 2025.
Estimates Moving South for F Stock
The Zacks Consensus Estimate for Ford’s 2025 sales and earnings implies a year-over-year decline of 7% and 40%, respectively. Take a look at how the estimates have been revised over the past 30 days.
Image Source: Zacks Investment Research
Conclusion
While Ford stock looks cheap on paper, especially with its low 0.26 forward P/S ratio and generous dividend yield, this doesn’t necessarily mean it’s time to buy. Indeed, the company has promising growth drivers in its Ford Pro division, where strong demand and rising software revenues are helping offset cyclicality.
However, headwinds are building elsewhere. Ford’s EV segment continues to post steep losses, and its traditional ICE business is showing signs of slowing, with lower sales and profit drag expected. Along with the projected tariff impact and declining earnings estimates, the near-term setup looks uncertain.
For existing investors, Ford’s healthy balance sheet and commitment to shareholder returns offer reasons to stay put. But for new investors, a wait-and-watch approach may be more prudent. Ford needs clearer momentum and positive estimate revisions before it looks like a buy. It’s prudent to watch how the next few quarters unfold, especially on costs, tariffs and Ford Pro execution.
Image: Bigstock
Ford Stock Looks Cheap at 0.26X P/S - But is It Worth Buying?
Key Takeaways
U.S. legacy automaker Ford (F - Free Report) is currently trading at a 0.26 forward 12-month price-to-sales (P/S) ratio, below the industry levels as well as its own 5-year average. The valuation also stacks up favorably against its closest peer, General Motors (GM - Free Report) , and the electric vehicle giant, Tesla (TSLA - Free Report) . General Motors has a P/S of 0.27X, while Tesla is trading at a much loftier 9.88X multiple. Of course, Tesla’s valuation is less tied to current fundamentals and more driven by optimism around unproven future bets, like robotaxis and artificial intelligence.
Ford looks undervalued despite the stock rising roughly 7% year to date against the industry’s loss of more than 19%. Over the same timeframe, shares of General Motors have declined almost 10%, and Tesla slid 20%.
YTD Price Performance Comparison
With Ford’s valuation looking cheap, the real question now is whether Ford has the momentum and fundamentals to deliver a real upside from here.
Factors That Could Drive Ford’s Growth
Ford remains a key player in the U.S. auto market, with a lineup that continues to resonate with American buyers. The F-Series trucks continue to be a best-seller, and models like the Maverick pickup, Escape, Explorer, Expedition, and Edge keep Ford well-positioned in the SUV and crossover space.
One of the major key catalysts for Ford currently is its Ford Pro business, which is focused on commercial customers. The combination of Ford Pro's strong order books, increasing demand signals and the successful launch of the all-new Super Duty sets the stage for a highly promising future for the Ford Pro segment. The growing interest in its software and service offerings is also driving the unit’s earnings. The segment has around 675,000 paid software subscriptions, with strong ARPU growth driving incremental revenues. Software services also serve as a countercyclical measure for the segment.
Ford’s healthy balance sheet and investor-friendly moves instill investor confidence. The company ended the first quarter of 2025 with roughly $45 billion in liquidity, including around $27 billion in cash. Its superior liquidity profile provides a solid foundation for investment in Ford+ priorities. Encouragingly, Ford is on track to deliver $1 billion in net cost reductions this year, excluding tariff effects.
Ford’s dividend yield of over 5% stands out as an attractive option for income-focused investors, especially when stacked against the S&P 500’s average yield of just more than 1%. With plans to return 40-50% of its free cash flow to shareholders, Ford underscores its commitment to rewarding investors, even as it navigates a major transformation of its business.
Challenges in Ford’s Path
Ford’s EV business is under pressure. Its Model-e segment is bearing the brunt of stiff competition, pricing pressure and significant costs associated with new-generation EV development. After having incurred losses of $4.7 billion in its EV business in 2023, Ford’s loss from Model-e widened to $5.07 billion in 2024, exacerbated by ongoing pricing pressure and increased investments in next-generation EVs. The company is expected to incur huge losses in its EV business this year as well.
The Ford Blue division seems to be losing momentum. Ford expects to sell fewer ICE vehicles compared to last year. Additionally, a shift in product mix and foreign exchange headwinds will drag profits.
The automaker is bracing for tariff-related headwinds as well. The full impact of shifting tariffs and potential retaliatory measures on the auto supply chain remains uncertain across the industry. In this context, Ford has projected a net negative impact of approximately $1.5 billion on its adjusted EBIT in 2025.
Estimates Moving South for F Stock
The Zacks Consensus Estimate for Ford’s 2025 sales and earnings implies a year-over-year decline of 7% and 40%, respectively. Take a look at how the estimates have been revised over the past 30 days.
Conclusion
While Ford stock looks cheap on paper, especially with its low 0.26 forward P/S ratio and generous dividend yield, this doesn’t necessarily mean it’s time to buy. Indeed, the company has promising growth drivers in its Ford Pro division, where strong demand and rising software revenues are helping offset cyclicality.
However, headwinds are building elsewhere. Ford’s EV segment continues to post steep losses, and its traditional ICE business is showing signs of slowing, with lower sales and profit drag expected. Along with the projected tariff impact and declining earnings estimates, the near-term setup looks uncertain.
For existing investors, Ford’s healthy balance sheet and commitment to shareholder returns offer reasons to stay put. But for new investors, a wait-and-watch approach may be more prudent. Ford needs clearer momentum and positive estimate revisions before it looks like a buy. It’s prudent to watch how the next few quarters unfold, especially on costs, tariffs and Ford Pro execution.
Currently, Ford currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here