Ford Stock Forecast & Analysis: Is It a Buy?

Written by Sean GraytokUpdated: 8th May 2022
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In this Ford stock forecast, we will analyze the company’s position in the EV and automaker markets, and speculate on the investment potential of its stock. 

Ford Stock Forecast: Background

Ford Motor Company is an American multinational automaker that was founded by Henry Ford in 1903.

Today, it has best-selling vehicles in several categories and is one of the world’s most popular car companies.

Ford has only had 11 CEOs in its 118-year history, but four in the last decade.

Its current leader Jim Farley is leading the company into its next chapter of electric vehicles, a potential catalyst for its share price that’s been lagging for decades.

Ford Stock Forecast: Investment Potential

#1. Electrifying the Fleet

Ford recently revealed the F-150 Lightning, the electric version of its best-selling pickup truck, as part of its $30 billion investment to electrify its fleet by 2025.

The company received 70,000 orders for Lightning in the first week of taking orders.

CEO Jim Farley intends for the Lightning version of the F-150 to surpass its gas-powered version, which is already the nation’s best-selling truck.

Talk is cheap, but Ford is backing it up.

The Mustang Mach-E just won the Car and Driver EV of the Year award, beating out 10 other vehicles, including three different Tesla models and the Porsche Taycan.

This puts Ford on the right side of innovation — we expect all automakers to eventually shift to EVs. Those that aren’t making significant investments today may not survive the transformation.

#2. Software is Eating the Ford (in a good way)

A second-order effect of jumping into EVs is adopting software — and in a big way.

Ford is installing next-gen electrical architecture and artificial intelligence in its fleet of battery electric vehicles.

The company calls it “Blue Oval Intelligence,” a nervous system upgrade that includes software architecture, sensing hardware, onboard computers, memory units, and cloud and edge networks.

It’s official — Ford is cloud-enabled (thanks to a six-year partnership with Google). That sentence alone might justify taking a swing at the stock.

Blue Oval Intelligence collects real-time vehicle data to prevent breakdowns and optimize servicing.

Drivers can download the app and see bumper-to-bumper data on their car, potentially identifying the small repairs before turning them into big ones.

This results in new revenue opportunities for Ford via ‘Telematics’ and ‘Digital Servicing’ while simultaneously improving the customer experience.

People use their smartphones to work, bank, pay bills, and communicate. Shouldn’t their car, probably their second largest expense, be on their device too?

Ford expects 1M connected vehicles by year’s end and 33M connected cars by 2028.

#3. The EV Arbitrage

In his article Ford vs. Tesla, Ben Carlson discusses the potential for Ford to outperform Tesla (TSLA) at their current levels.

He writes, “Elon Musk is a volatile character to be sure, but he has single-handedly dragged the legacy automakers kicking and screaming into the electric vehicle space. In doing so, he may have awakened a sleeping giant in Ford.”

Carlson believes the F-150 Lightning could be the vehicle that gets traction in terms of mass adoption in EVs, given the F-150’s built-in demand and $40k starting price tag.

Cybertruck price and design will probably limit its adoption.

Speaking of the Cybertruck — it’s unclear if it will ever exist. It is set to begin production in late 2021, but Tesla is famous for its overly ambitious timelines and marketing events disguised as product releases (Roadster, Semi, Cybertruck).

We expect to see far more F-150 Lightnings on the road than Cybertruck in the coming years.

Granted, that doesn’t mean Ford will outpace Tesla. As Carlson writes, “There are still enough differences between these companies for them to co-exist.”

Ford Stock Forecast: Moat

We believe the following describes Ford’s differentiator that other automakers struggle to replicate:

Inertia + Thoughtful Innovation

Ford was founded in 1903 and has risen to prominence with the United States.

Ford converted its factories during WWI and WW2 to create aircraft, tanks, boats, and armored vehicles for the U.S. military.

It’s not an accident that Ford is America’s favorite car company — it’s been here from the start.

This has created an inertia that’s fueled its dominance for decades.

However, combining this inertia with thoughtful innovation is what separates Ford from its competitors.

Ford knows what its customers like, so it must maintain that authentic Ford feeling while simultaneously innovating with next-gen technology.

If it loses that Ford feeling at the cost of innovation, its loyal customers may turn elsewhere.

If it doesn’t innovate enough, it’ll lose market share to automakers with better products at lower costs.

Ford has found the balance. Given the positive reaction to the F-150 Lightning, customers appear to trust the company moving forward.

Ford Stock Forecast & Analysis: Earnings 

Ford reported fourth-quarter 2021 earnings on February 3, 2022 — here are the highlights:

  • Adjusted EPS: 26 cents vs 45 cents 
  • Automotive revenue: $35.3 billion vs $35.5 billion expected 

Ford expects to earn at least $11.5 billion in pretax profits for the year 2022, which represents 15% growth from a year prior. 

The company gave optimistic comments about supply chain complications, saying, “We’re bullish on 2022 even with persistent supply chain uncertainties that again illustrate the growing strength of our underlying business.’

Shares fell as much as 6% after the call.

Ford Stock Forecast: The Competition

Ford controls 43% of the commercial full-size truck market. The F-150 family has been America’s best-selling vehicle for 39 straight years.

Ford is welcoming new competition as it aggressively invests in the industry’s shift to electric vehicles. Here are Ford’s top competitors:

  • General Motors (GM)
  • Honda (HMC)
  • Toyota Motor Corp.
  • Tesla (TSLA)
  • Nio (NIO)
  • Ferrari (RACE)
  • Fiat Chrysler (FCAU)
  • XPeng (XPEV)
  • Volkswagen AG (OTCMKTS: VWAGY)
  • Li Auto Inc (LI)
  • Lordstown Motors (RIDE)
  • Canoo (GOEV)
  • Lucid Motors (CCIV)
  • Rivian Automotive

Ford Stock Forecast: The Risks

#1. Old Dog & New Tricks

Some believe that legacy automakers will be replaced by the disruptor class of EV startups, but we expect a much less dramatic landscape change.

Ford buyers will likely continue buying Ford’s, they’ll just be buying the electric version of their favorites.

Additionally, we believe that full-self-driving technology is further away than Tesla makes it seem.

Automakers will probably flex their improvements in FSD more than it having a significant role in the vehicle itself. Granted, this jockeying can still impact a stock’s price.

It’s unclear whether or not Ford has to achieve FSD for it to compete with Tesla in the long term — FSD could still be decades away.

#2. Vulnerabilities in the Supply Chain

As globalization came to a halt during the pandemic, companies were forced to rethink their supply chains.

Ford has started hoarding parts and materials to mitigate future vulnerabilities, a major change from its traditional “just-in-time” method of production.

Tesla’s advantage over other automakers is vertical integration — it manufactures as much of its parts as possible.

So when a Japanese chip company goes up in flames, Tesla’s production continues as normal while Ford’s does not.

Ford Stock Allocation in Your Portfolio

Having trouble determining how much Ford stock to buy? The following questions might help you decide how much to add to your portfolio:

  • Will Ford successfully shift into electric vehicles?
  • Is an electric vehicle ETF a better buy?
  • Can Ford continue to lower battery costs?
  • Will Ford’s customer base buy EVs while it’s still a choice?
  • Are there better automaker or EV stocks than Ford?
  • Will Ford recover from the chip shortage and be able to prevent future supply chain shocks?
  • Will Wall Street allow Ford to trade at higher multiples once it’s considered an “EV stock?”
  • Can Ford remain on top of the commercial van market, and does it have to?

Ford Stock Forecast: FAQs

Does Ford stock pay a dividend?

Ford suspended its dividend at the onset of the pandemic but maybe in a position to restore it in 2021. Estimates suggest a potential yield on the stock of 2.5%.

Why is Ford stock so cheap?

There are several reasons why Ford stock is cheap. Investors might have been looking for better upside in the new EV companies. Or they were turned off by the amount of debt Ford has racked up. Or they were scared off by Ford’s decreasing margins.

Is Ford stock a better buy than GM?

Ford and GM stock are up significantly in 2021. In fact, GM hit an intraday high of $63 in June. Investors are getting excited about F and GM’s next chapters in electric vehicles, car connectivity, and autonomous capabilities.

Bottom Line: Ford Stock Forecast

Shares of Ford have never been more interesting — the company’s shakeup has made it one of the best-performing stocks of 2021.

Further upside depends on how Wall Street measures the success of Ford’s restructuring.

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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Ford stock

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.