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  5. Why Is Ford Stock So Cheap Despite A Strong Legacy?
ford-logo-flag-on-NYSE's-building

Why Is Ford Stock So Cheap Despite A Strong Legacy?

2025-06-026minsHuman written
author
Written byGourav Gaud
author
Edited byFei Chen
Financial Researcher
Content

Key Takeaways

  • Ford's stock is trading at a low valuation due to high debt levels, ongoing challenges in its EV transition, and significant impacts from tariffs.
  • Despite these challenges, Ford has demonstrated resilience in its financial performance and has strategic initiatives in place to improve profitability.
  • Analysts have mixed views on Ford stock, with price targets suggesting limited upside from current levels.
  • Investors should carefully consider both the risks and potential rewards before investing in Ford stock.

Introduction

Have you ever wondered why Ford stock is so cheap despite the company's long history and significant market presence? You're not alone. Many investors are puzzled by Ford's low stock price, especially when compared to some of its peers. 

We'll delve into the reasons behind Ford's current valuation, examining its financial performance, challenges in the electric vehicle (EV) transition, the impact of tariffs, and whether it's a good time to buy the stock. 

By leveraging advanced AI tools like those offered by Intellectia.ai, you can gain deeper insights into these factors and make more informed investment decisions.

Ford Financial Performance 

Ford's stock price has been under pressure, trading at approximately $10.31 as of May 2025, near the lower end of its 52-week range of $8 to $14. This positioning suggests that the stock is perceived as undervalued by some investors, but several underlying factors contribute to its current price. As of Q1-2025, Ford reported a TTM revenue of $182.87 billion with a 3% year-over-year growth.

an-image-showing-intellectia-ai-ford-stock-price-history

Source: intellectia.ai 

Ford's financial health is a significant concern, particularly its high debt levels. As of March 2025, the company had total debt of approximately $157.5 billion against shareholders' equity of $44.6 billion, resulting in a debt-to-equity ratio of 3.53. This high leverage can increase financial risk, especially if interest rates rise or economic conditions worsen.

Financial Metric

Value

Total Debt (2025)

$157.5B

Shareholders' Equity

$44.6B

Debt-to-Equity Ratio

3.53

Profit Margin

2.74%

Operating Margin (TTM)

0.97%

Ford's profit margin stands at 2.74%, which is lower than General Motors' 3.08% and significantly below Tesla's 6.38%. This lower profitability contributes to the perception that Ford stock is cheap.

Ford Valuation Metrics

Ford's valuation metrics provide further insight into its low stock price. The price-to-earnings (PE) ratio is 8.25, which is lower than the S&P 500 average of around 20-25 but comparable to General Motors' 6.86. Ford's price-to-book (P/B) ratio is approximately 0.92, indicating that the stock is trading below its book value, a potential sign of undervaluation.

CompanyPE RatioP/B RatioProfit Margin
Ford8.250.922.74%
General Motors6.860.733.08%
Tesla208.5615.666.38%

 

To dive deeper into Ford's financial health, you can use Intellectia.ai's AI stock analysis to uncover trends and patterns that might influence your investment decisions.

Challenges in EV Transition & Competition for Ford Stock

Ford is heavily invested in its EV business, but profitability remains elusive. The company projects losses of up to $5.5 billion on its EV and software operations for 2025, similar to the previous year.

The EV market is highly competitive, with established players like Tesla and emerging competitors like BYD capturing significant market share. Ford's EV sales have been inconsistent; while there was a surge in US EV sales earlier, April 2025 saw a 40% year-over-year decline in EV sales. This volatility highlights the challenges Ford faces in gaining traction in the EV market.

a-chart-showing-us-ev-market-share-by-auto-group-Q1-2025

Source: Clean Technica

Investor sentiment towards Ford may be dampened by the perception that the company is lagging in the EV race. Despite efforts to electrify iconic models like the Mustang Mach-E and F-150 Lightning, the lack of immediate profitability in the EV segment weighs on the stock price. 

Tools like Intellectia.ai's Day Trading Center can help you track market trends and investor sentiment to better understand Ford's position.

Impact of Tariffs and Trade Policies on F stock

Ford faces significant headwinds from tariffs and trade policies. The company suspended its 2025 financial guidance due to an expected $2.5 billion impact from tariffs on imported vehicles and parts. These tariffs, implemented in early 2025, affect Ford's supply chain and production costs, adding uncertainty to its financial outlook.

CountryAutosSteel and AluminumOther Imports
Canada25% on non-U.S. content (52.5% non-USMCA compliant)25% on steel/aluminum (excludes derivative articles melted and poured/cast and smelted in the U.S.) †Non-USMCA compliant imports: 50%25% on non-USMCA goods; 10% on energy and potash
Mexico25% on non-U.S. content (52.5% non-USMCA compliant)25% on steel/aluminum (excludes derivative articles melted and poured/cast and smelted in the U.S.) †Non-USMCA compliant imports: 50%25% on non-USMCA goods
China47.50%50%30% on all other goods
Rest of World (ex. Canada and Mexico)25%*25%10% tariff on imports from all countries except Canada and Mexico

Source: brookings.edu

Ford plans to offset some of these costs through market optimization and cost mitigation, but the full impact remains unclear, contributing to the stock's low valuation.

Should I Buy Ford Stock?

Strategic Initiatives and Future Outlook

Ford is taking steps to address its challenges. The company is focusing on operational restructuring, targeting $1 billion in cost reductions in 2025 through lower warranty and material costs. These initiatives could improve profitability and position Ford for long-term growth.

Risks

Investing in Ford comes with risks, including:

  • Cyclicality of Automotive Demand: The automotive industry is sensitive to economic cycles, which can impact sales.
  • Sustainability of Dividends: Ford's dividend yield is 7.27%, but financial pressures could threaten its sustainability.
  • EV Market Competition: Long-term uncertainty in EV adoption and competition from Tesla and others pose challenges.

Will Ford Stock Go Up? 

Analysts have mixed views on Ford stock. The average one-year price target is around $10.43, with estimates ranging from $7.00 to $16.00. This suggests limited upside from the current price of $10.31, with a consensus "Hold" rating. Some analysts see potential for growth if Ford executes its cost-cutting and hybrid strategies effectively, but caution prevails due to market uncertainties.

an-image-showing-intellectia-features-analysts-rating

Source: intellectia.ai

To make an informed decision, consider using Intellectia.ai's AI trading signals to identify potential entry and exit points for Ford stock based on real-time market data.

Conclusion

Ford's stock appears cheap based on its low PE ratio of 8.25 and P/B ratio of 0.92, but significant challenges like high debt, EV losses, and tariff impacts explain its current valuation. 

While Ford's strategic initiatives, such as cost reductions and a focus on hybrids, offer hope for future growth, investors must carefully weigh these against the risks. The automotive industry is navigating a transformative period, and staying informed is crucial.

To enhance your investment strategy, you can use Intellectia.ai’s features like AI stock picks, trading signals, and in-depth market analysis.

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Frequently asked questions

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Why is Ford stock so low?

Ford stock is low due to high debt levels, with a debt-to-equity ratio of 3.53, significant losses in its EV business, and a $2.5 billion expected impact from tariffs. Lower profitability, with a 2.74% profit margin, also contributes to its depressed valuation compared to peers like Tesla.
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Is Ford a good stock to buy?

Whether Ford is a good stock to buy depends on your risk tolerance and investment goals. Its low valuation suggests potential undervaluation, but risks like EV competition and economic sensitivity are significant.
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Which stock is better, GM or Ford?

Both GM and Ford face similar industry challenges, but GM has a slightly higher profit margin (3.08%) and a lower P/B ratio (0.73) compared to Ford's 2.74% and 0.92. Your choice should depend on a detailed analysis of their financials and strategies.
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