Morningstar

Ford Earnings: Model e Business Improvement Offsets Other Segment Headwinds

We think the company is doing a good job on costs it can control around materials and warranty, but we expect commodity cost pressures to be a big story for all automakers in 2027.

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’s Earnings

Ford Motor’s F third-quarter total company adjusted EBIT rose 2.8% year over year. The company raised the low end of 2026 guidance for this metric to $10.5 billion from $10 billion and maintained 2026 adjusted free cash flow guidance. Adjusted diluted EPS of $0.49 beat the $0.41 FactSet consensus.

Why it matters: We think Ford had a good quarter, but its 2.8% EBIT growth lagged rival GM’s 21.6% increase. The 2026 commodity cost headwind increasing by about $500 million to about $2.5 billion is not a surprise.

  • The Model e segment (electric vehicle and Ford Energy) pared its losses year over year by 25%, or $352 million. Favorable mix from Model e and Ford Pro slightly exceeded volume and mix headwinds in Ford Blue.
  • Software services growth also helped offset a $700 million cost headwind from commodities, Super Duty launch costs, and investments for the universal EV platform due out late next year. CEO Jim Farley said on the call that 2027 profit will be roughly in line with 2026.

The bottom line: We are leaving our $19 fair value estimate for no-moat Ford in place. We think the company is doing a good job on costs it can control around materials and warranty, but we expect commodity cost pressures to be a big story for all automakers in 2027.

  • Pricing was also a $100 million EBIT tailwind, with a $200 million incremental pricing benefit from Model e. We expect good total company pricing in 2027, though possibly not as strong as the roughly 1% increase guided to for 2026, up from July guidance of about a half percentage point.
  • To keep pricing healthy, Ford is taking a different approach on F-150 inventory compared with competitors like GM and Stellantis. Ford targets only a 50-day to low 60-day supply instead of its old normal target of 80-100 days. This risks some volume loss but helps pricing of Ford’s top vehicle.

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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