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Ford's on the Right Road

Its investor day shows that it's a major player in electrification and connectivity.

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Ford (F) used its long-awaited investor day to introduce its Ford+ plan. We like what we heard around the automaker's aggressive move toward battery electric vehicles, including that 40% of global volume will be all electric by 2030 and BEV spending will increase by about $8 billion to more than $30 billion for 2016-25. For years, Ford has talked about a total company adjusted EBIT margin of 8%, and it now feels confident in saying that will occur in 2023. This margin assumes 10% in North America and 6% in Europe. We’ve raised our fair value estimate to $17 per share from $15 to factor in higher EBIT margins for 2023-25 as well as a slightly higher assumed return on new invested capital as Ford seeks to increase its connected service offerings over time.

Ford did not reveal all its plans; it will have more commentary on its autonomous vehicle efforts later this year and it mentioned new vehicles yet to be disclosed. With regard to the dividend coming back, management said only that there are shareholders who want its return, so we continue to expect an announcement later this year. We are confident that Ford is on the right path and has made meaningful restructuring actions in Europe and South America while enhancing its product lineup globally to focus on light-truck models, so we have lowered our fair value uncertainty rating to high from very high.

David Whiston does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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