Latest news with #FordF
Yahoo
6 days ago
- Automotive
- Yahoo
Is Ford Stock Worth Buying Now on its EV Strategy Shift?
Ford F is rewriting its electric playbook. After a few tough years in the EV market, the automaker is steering away from high-priced models and aiming for affordability. The new plan revolves around a fresh platform designed for a lineup of lower-cost EVs. It's an ambitious bet that could reshape Ford's position in the EV race if executed well. At this point, it's worth asking whether it makes sense to buy Ford stock now. But first, let's look at why the company needed a strategy shift and what's included in its new plan. Ford's New Play: Affordable EVs Ford's latest plan centers around the new Ford Universal EV Platform, which will underpin a family of lower-cost electric models. The first in line will be a midsize, four-door electric pickup, with an expected starting price of around $30,000. Production will take place at the Louisville Assembly Complex in Kentucky, backed by a $5 billion investment that will add nearly 4,000 jobs. Deliveries of the model are slated to begin in 2027. Switch Auto Insurance and Save Today! Great Rates and Award-Winning Service The Insurance Savings You Expect Affordable Auto Insurance, Customized for You Ford CEO Jim Farley has called the company's new affordable EV push its next 'Model T moment.' Alongside the new pickup, Ford is delaying its large electric truck and van to 2028. Meanwhile, it's deepening focus on lithium iron phosphate (LFP) batteries, which will be assembled in the United States. This is a first for any automaker in America and should help reduce costs while freeing up vehicle interior space. The new platform streamlines production. Ford says it reduces parts by 20%, fasteners by 25%, and plant workstations by 40%, cutting assembly times by about 15%. These efficiencies are crucial for keeping the $30,000 target price realistic — especially with shifting U.S. EV policies under President Donald Trump, including the planned end of EV tax credits after Sept. 30. Why Ford's EV Business Needed a Rejig In 2021, Ford made headlines with the Mustang Mach-E, followed by the F-150 Lightning and an electric van a year later. The quick rollout initially put it ahead of other legacy automakers like General Motors GM. But as EV sales growth slowed, material costs soared, and Tesla TSLA began aggressive price cuts, Ford's EV business started looking less appealing. Ford's electric vehicle business has been a drag on its bottom line. Over the past two and a half years, the division has racked up roughly $12 billion in losses, including $2.17 billion in just the first half of this year. In contrast, General Motors took a slower, more methodical path to EV production. It focused on developing standardized batteries to lower costs and formed joint ventures that quickly built battery plants. As a result, General Motors sold over 46,000 EVs in the second quarter (second only to Tesla)— more than double Ford's total — and now offers more than 10 electric models, ranging from the $35,000 Chevrolet Equinox EV to the $130,000 Cadillac Escalade IQ. Meanwhile, Chinese companies like BYD Co Ltd BYDDY have surged ahead globally. BYD now sells more EVs than any Western manufacturer, producing them at a fraction of the cost and putting pressure on U.S. automakers to rethink their strategies. In fact, BYD dethroned Tesla in EV sales for the third straight quarter in battery EV sales in the second quarter of 2025. Tariffs & Recalls to Weigh on Ford Ford's challenges extend beyond EV losses. The company has faced costly recalls and repairs on its gasoline-powered lineup, denting profits from its core truck and SUV business. Tariffs are another growing headache. In the second quarter alone, Ford absorbed $800 million in tariff-related costs. It now expects a net $2 billion tariff hit for 2025, up from earlier forecasts. The gross impact could be as high as $3 billion, though Ford aims to offset $1 billion through cost-cutting Ford has been leading the auto industry in recalls so far in 2025. These headwinds contrast with GM's steadier profitability in recent years and highlight how far Ford must go to stabilize its earnings. And while BYD's low-cost manufacturing model poses a serious threat in global markets, it also sets a benchmark Ford will need to match or beat if it hopes to gain share internationally. F Not Without Strengths It's not all bad news. Ford's Pro division, which serves commercial and government fleets, continues to perform well. Hybrid sales are growing, giving Ford a hedge as EV adoption slows. The company also boasts a strong balance sheet and an attractive dividend yield, appealing to long-term income-focused investors. The Zacks Rundown on Ford Stock Shares of Ford have increased around 10% over the past year, underperforming the industry. Image Source: Zacks Investment Research From a valuation standpoint, F trades at a forward price-to-earnings ratio of 0.27, below the industry average. It carries a Value Score of A. Image Source: Zacks Investment Research See how the Zacks Consensus Estimate for Ford's earnings has been revised over the past 60 days. Image Source: Zacks Investment Research The Bottom Line on Ford Ford's new EV strategy has potential, especially if it can deliver a $30,000 electric pickup with decent margins. The shift to U.S.-made LFP batteries and streamlined production is a smart response to rising costs and fierce competition from Tesla, GM and BYD. But the benefits are still years away. Also, lest we forget, the company has scaled back some of its earlier EV ambitions, pausing one of four planned battery plants. CEO Jim Farley has, in fact, warned that there are 'no guarantees' the new manufacturing approach will succeed. For now, the focus is on proving the economics of its affordable EV program before scaling further. For new investors, it may be too soon to jump in. The stock could gain momentum once Ford shows real progress in executing its affordable EV plans and improving profitability. Until then, patience may pay off. Existing shareholders, however, can take comfort in Ford's dividend and long-term prospects — provided they're willing to weather some short-term bumps along the way. F stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Byd Co., Ltd. (BYDDY) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
30-07-2025
- Automotive
- Yahoo
Ford Q2 Earnings Coming Up: Is That Fat Dividend Still Safe?
U.S. legacy automaker Ford F is set to release its second-quarter 2025 report tomorrow, after market close. The Zacks Consensus Estimate for Ford's Q2 EPS and automotive revenues is pegged at 34 cents and $41.7 billion, respectively. In the trailing four quarters, Ford surpassed EPS estimates on two occasions, missed once and matched on the other. Investors are now waiting to see if Ford can pull off an earnings surprise this time. But there's another big question on shareholders' minds— will Ford be able to sustain its attractive dividend payout, or will rising pressure from tariffs, massive recall costs and deep EV losses force a cut? Ford's Dividend Appeal Vs. GM & STLA One of the main reasons investors still hold on to Ford shares is its attractive dividend yield. The company currently pays a quarterly dividend of 15 cents per share and has increased its payout five times over the last five years. At more than 5%, Ford's dividend yield is significantly higher than the S&P 500 average of 1.16%. Its current payout ratio stands at about 40%, which might raise concerns for some about how sustainable the dividend really is—especially in a volatile environment. Image Source: Zacks Investment Research Ford's closest rival, General Motors GM, also pays a 15-cent quarterly dividend, but its payout ratio is a more conservative 6%. Facing macroeconomic uncertainty and tariff risks, General Motors paused its share buyback program in Q1—though it resumed repurchases this month. Italian-American auto giant Stellantis STLA went a step further by slashing its 2025 dividend by half compared to 2024, citing financial and geopolitical pressures. Stellantis also halted its buyback plan. What's Fueling Dividend Worries? While Ford doesn't have a share repurchase program in place, many investors are beginning to question whether its generous dividend is sustainable. And there's reason to worry. Ford has paused its full-year guidance, warning of a potential $2.5 billion hit from Trump's tariffs. While it plans to offset $1 billion of that impact, the remaining $1.5 billion—expected to hit in 2025—remains a big overhang. Additionally, Ford's Model e division continues to bleed cash. Losses from its EV business widened to $5.07 billion in 2024 due to pricing pressure and heavy investment in next-gen EVs. The company is expected to incur huge losses in its EV business this year as well. Massive spending on IT upgrades, product development and connectivity features is also weighing on cash flow. Adding to the strain, Ford has been leading the industry in vehicle recalls so far in 2025 and booked a $570 million charge in Q2 for related costs. While the company paid $3.1 billion in dividends last year, supported by $5.9 billion in net income, cash flow for 2025 is expected to drop sharply, raising real questions about how long Ford can keep up its high dividend payout. Is a Payout Cut Coming? Probably Not Yet Ford ended Q1 with roughly $45 billion in total liquidity, including about $27 billion in cash. The company has a target of returning 40-50% of its free cash flow to shareholders, showing its commitment to consistent payouts. Its high yield also offers a cushion against stock volatility and appeals to income-focused investors. In fact, what some may overlook is that Ford also has a history of paying out special dividends during strong cash flow years. Yes, the expected hit to cash flow from tariffs and EV losses could put pressure on Ford's dividend. But for now, we think the payout is safe. Ford has built a reputation as a dependable dividend stock and is unlikely to cut unless conditions worsen significantly. As it releases earnings tomorrow, investors will watch not just for tariff-related commentary, but for any signals around the dividend's future. The Zacks Rundown on Ford Ford currently carries a Zacks Rank #3 (Hold) and has a VGM Score of A. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Shares of the company have risen roughly 14% year to date against the industry and sector's declines. Comparatively, General Motors stock has inched up 0.3% and Stellantis shares have declined 25.7% over the same timeframe. YTD Price Performance Comparison Image Source: Zacks Investment Research The Zacks Consensus Estimate for Ford's 2025 EPS and automotive sales is pegged at $1.14/share and $161 billion, implying a decline of 38% and 6.4%, respectively. See how the EPS estimates have been revised in the past 60 days. Image Source: Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Stellantis N.V. (STLA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-04-2025
- Automotive
- Yahoo
Ford Stock Near 52-Week Low: Is it a Steal or Still a Risk?
U.S. legacy automaker Ford F is having a tough run on the bourses. The stock is down roughly 24% over the past year. Shares closed at $9.33 in the last trading session, close to its 52-week low of $8.44. Meanwhile, Ford's closest rival, General Motors GM, has risen 2.2% in the past year. Italian-American automaker Stellantis STLA, on the other hand, has lost 66% in the same timeframe. Ford is reeling under persistent losses from its electric vehicle (EV) business, with no clear turnaround in sight. Further, declining ICE (internal combustion engine) business profitability and volumes, along with rising risks from Trump's tariff policies, are playing spoilsports. Image Source: Zacks Investment Research The stock is currently trading below its 50 and 200-day SMA, signaling bearish trend. It has a Momentum Score of C. Image Source: Zacks Investment Research From a valuation standpoint, Ford looks cheap at the first glance. However, ongoing headwinds may be weighing on investor sentiment and contributing to the low multiples. Its 12-month forward sales multiple is lower than industry levels. The metric stands at 0.23 for Ford, compared with 0.24 for General Motors and 0.15 for Stellantis. Image Source: Zacks Investment Research Ford's Model e division (focused on EVs) remains under pressure, hit by intense competition, pricing challenges and high development costs tied to next-gen EVs. Losses from the segment widened to $5.07 billion in 2024 from $4.7 billion in 2023. Ford now expects a deeper loss of $5-5.5 billion for the full year. Meanwhile, its Ford Blue division is also showing signs of weakness. The company projects 2025 EBIT of $3.5-4 billion, down from $5.3 billion in 2024. Lower ICE vehicle sales, an unfavorable product mix and foreign exchange headwinds are expected to weigh on performance. Trump's 25% tariffs on imports from Mexico and Canada pose challenges for Ford. CEO Jim Farley has already warned that tariffs would bring 'a lot of cost and a lot of chaos' to the U.S. auto industry. These tariffs are expected to disrupt supply chains, raise raw material costs and ultimately increase vehicle prices — potentially hurting demand, sales and profits. However, the bigger impact may not come from the 25% levy on imported vehicles alone but from an expected additional 25% tariff on imported auto parts next month. While Ford manufactures around 82% of the vehicles it sells in the United States domestically, only about one-third of those cars are made with domestic parts — leaving the company vulnerable to rising component costs. Importantly, the guidance doesn't even factor in potential policy shifts under Trump. For the full year, Ford expects adjusted EBIT between $7 billion and $8.5 billion, down from $10.2 billion in 2024. While strength in Ford Pro and Ford Credit may offer some support, it's unlikely to fully offset rising pressure from Model e, Blue, warranty costs and generous incentives — all of which threaten to drag down margins and free cash flow. Adjusted FCF is projected in the range of $3.5–$4.5 billion, a sharp drop from $6.7 billion in 2023. First-quarter 2025 results are likely to be particularly weak. Ford expects first-quarter 2025 adjusted EBIT to break even, a sharp drop from $2.7 billion in the first quarter of 2024 and $2.1 billion in the fourth quarter of 2024 due to lower volumes, a 20% production cut and plant launch activities. Ford's high dividend yield of more than 6% is quite appealing to income-focused investors, especially when compared to the S&P 500's average of 1.38%. The company targets a payout ratio of 40-50% of free cash flow, reinforcing its commitment to shareholder returns. However, that payout could come under pressure. Tariffs—especially when extended to auto parts—will raise costs, squeeze margins and hurt profits. Ford may have to reassess its dividend policy if tariff burden persists long. That said, a near-term cut appears unlikely. Ford's strong liquidity position provides a cushion, with $28 billion in cash and around $47 billion in total liquidity at the end of 2024. This financial buffer allows the company time to navigate policy uncertainty. Still, investors relying on the dividend should watch for developments, as prolonged earnings pressure could eventually challenge the sustainability of Ford's generous yield. The Zacks Consensus Estimate for Ford's 2025 sales and EPS implies a decline of 5% and 27%, respectively. Discouragingly, its EPS estimates have been southbound in the past 60 days. Image Source: Zacks Investment Research Despite low valuation and strong dividend yield, Ford faces too many headwinds to ignore. Widening EV losses, weakening ICE performance and looming tariffs threaten margins and earnings. Its 2025 outlook is already soft and doesn't even account for tariff policy shifts. While its liquidity cushion may delay drastic actions like a dividend cut, ongoing operational struggles and weak near-term prospects suggest limited upside. Until there is more clarity, investors should avoid Ford and wait for a more stable setup. Ford stock currently carries a Zacks Rank #4 (Sell). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F) : Free Stock Analysis Report General Motors Company (GM) : Free Stock Analysis Report Stellantis N.V. (STLA) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Sign in to access your portfolio
