Morningstar

Ford Earnings: Guidance Increase Is Good News in an Uncertain Market

We have not felt this optimistic about Ford’s progress in years.

A general view of the Ford logo on a vehicle.
Robert Cianflone via Getty
Securities in This Article
Ford Motor Co
(F)

Key Morningstar Metrics for Ford Motor

  • Fair Value Estimate
    : $19.00
  • Morningstar Rating
    : ★★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : High

What We Thought of Ford Motor’s Earnings

Ford Motor F stock rose sharply after the automaker’s second-quarter adjusted diluted earnings per share of $0.42 beat the $0.35 LSEG consensus. The firm also raised 2026 guidance to adjusted EBIT of $10 billion-$11 billion from $8.5 billion-$10.5 billion and raised free cash flow guidance.

Why it matters: The guidance increase comes from better-than-expected volume, mix, and pricing. We’ve found Ford’s pricing expectation the past couple of years to be conservative, given that Americans continue to buy lucrative light-truck models and off-road and performance trims.

  • Volume will receive a boost in the second half from a ramp-up in the F-Series as Novelis aluminum supply increases and Ford adds 100,000 units of Canadian Super Duty capacity. Still, guidance implies lower second-half adjusted EBIT versus the first half’s $6 billion.
  • Improved F-Series volume will battle several cost headwinds in the second half, including unfavorable commodities, investments in Ford Energy and the universal electric vehicle platform, and launch costs for the new Super Duty capacity.

The bottom line: We are maintaining our $19 fair value estimate for no-moat Ford. We believe the company has finally reached an inflection point on cost control and quality. The 2026 JD Power US Initial Quality Study ranking Ford highest among the mass-market brands supports this view.

  • We have not felt this optimistic about Ford’s progress in years. The company has new verticals developing in energy storage, with 20 gigawatt-hours of capacity online by late 2027, and software services such as BlueCruise could add 50 basis points of EBIT margin annually in the future per Ford.
  • We see potential for shares to trade well into the $20s if the market becomes more optimistic on Ford’s prospects. However, P/E multiple expansion for Detroit automakers is rare. Automotive cash and securities of $22.1 billion bring downside protection from a US recession.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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