U.S. auto giant Ford F released its fourth-quarter 2024 earnings last Wednesday. While the company’s EPS and revenues beat estimates and also rose year over year, shares have taken a beating amid muted guidance.
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Ford Motor Company Price, Consensus and EPS Surprise
Ford Motor Company price-consensus-eps-surprise-chart | Ford Motor Company Quote
Wall Street analysts are turning bearish on the stock, as evident from the southward estimate revisions. Over the past seven days, the Zacks Consensus Estimate for 2025 and 2026 EPS has declined 5 cents and 3 cents, respectively.
Image Source: Zacks Investment Research
The past year hasn’t been a good one for Ford— primarily given its challenges in the electric vehicle (EV) business and high warranty costs. In 2024, Ford shares lost around 19% of its value as against the industry’s growth of 19%. The performance looks even worse when we compare it with its closest rival, General Motors GM, which surged 48% in the same timeframe.
F’s 2024 Price Performance Vs. GM & Industry
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So far in 2025, Ford has declined more than 6% and is currently trading under $10. Some investors might see an opportunity to buy the dip. But does the stock offer value at current levels, or is it best to steer clear? Let’s break it down.
Well, a couple of things are working for Ford. First, its Ford Pro unit strength. It was the only automotive segment of Ford that saw year-over-year growth in sales and EBIT last year. Revenues from the Ford Pro segment rose 15% in 2024 to $67 billion in 2024. EBIT also increased from $7.2 billion to $9 billion, with a margin of 13.5%. The combination of Ford Pro’s strong order books and the popularity of the all-new Super Duty sets the stage for a highly promising future for the Ford Pro segment.
The demand for Super Duty trucks and Transit vans remains robust, and the segment’s software and service subscriptions are expanding fast. Ford Pro software subscriptions grew 27% year over year to nearly 650,000. This year, Ford expects $7.5-$8 billion EBIT from the Pro segment. While that implies a year-over-year decline, it is still expected to be the major profit driver for the company.
Second, Ford’s dividend yield of over 6% is attractive. The company targets distributions of 40-50% of FCF going forward, demonstrating its commitment to shareholder returns. This high yield provides some buffer against the stock’s volatility.
Finally, Ford reduced net cost by $500 million in the second half of 2024 and has identified $1 billion in product design cost reductions for 2025.
But the positives end here. While Ford Pro and cost-cutting efforts provide some relief, they aren’t enough to outweigh the growing challenges across Ford’s broader business.
Ford Model E Unit Losses Aren’t Narrowing
The company’s Model e segment — its dedicated EV business — continues to struggle and the challenges stem from both internal and external pressure. Ford faces stiff competition, pricing pressure and significant costs associated with new-generation EV development.
Last year, volumes and revenues from the EV business contracted 9% and 35%, respectively, on a yearly basis. After having incurred losses of $4.7 billion in its EV business in 2023, Ford’s loss from Model e widened to $5.07 billion in 2024, exacerbated by ongoing pricing pressure and increased investments in next-generation EVs.
And this year seems no better despite a reduction of $1.4 billion in its EV business cost structure. The company expects segmental loss in the band of $5-5.5 billion. In comparison, General Motors has been making strides in cutting EV losses, with its EV portfolio turning “variable profit positive” in the final quarter of 2024. GM expects $2 billion in reduced EV losses this year, while Ford continues to struggle with scaling and efficiency.
Ford Blue Segment Outlook Dull
The Ford Blue division seems to be losing momentum. The company anticipates 2025 EBIT of $3.5-4 billion from the Blue segment. This implies a decline from $5.3 billion generated in 2024. The reason for this muted outlook? Ford expects to sell fewer ICE vehicles compared to last year. Additionally, a shift in product mix and foreign exchange headwinds will drag profits.
Q1 Looks Particularly Challenging for Ford
First-quarter 2025 adjusted EBIT is expected to be breakeven— that’s a sharp fall from $2.7 billion and $2.1 billion recorded in the first and the last quarter of 2024, respectively. Low volumes amid expected production cut of around 20%, unfavorable mix and launch activities at Kentucky Truck and Michigan Assembly Plants will impact the results.
Ford’s Full-Year View Also Muted
For the full year, adjusted EBIT is envisioned in the range of $7-$8.5 billion, down from $10.2 billion in 2024. While Ford Pro and Credit units are likely to offset poor performance from Model e and Blue units. Adjusted FCF is expected to be between $3.5 billion and $4.5 billion, down from $6.7 billion reported in 2023.
While Ford expects warranty costs to decline this year, they will still be a drag on overall profits. Further, margins are also expected to decline due to generous incentives about which the company has already warned.
And most importantly, the guidance doesn’t even take into account any changes in policies from Trump administration. While Trump’s 25% tariffs on imports from Mexico and Canada are on hold for now, chances of the tariffs being enacted are high. This could disrupt supply chains, increase raw material costs and finally translate to high cost of vehicles, thereby derailing demand and affecting sales and profits of Ford.
How to Play F Now
Ford’s valuation might seem tempting, but it’s not as cheap as it looks. The stock trades at a higher P/E ratio than GM.
Image Source: Zacks Investment Research
Persistent EV losses with no clear turnaround in sight, declining ICE business profitability, falling wholesale volumes and average selling prices, along with rising risks from trade policies, remain key concerns for Ford. Unless Ford can dramatically improve its EV strategy and boost margins in its traditional business, the stock remains a risky bet and should be avoided. The stock currently carries a Zacks Rank #5 (Strong Sell).
The Zacks Consensus Estimate for Ford’s 2025 automotive sales and EPS call for a decline of 2% and 12%, respectively, on a year-over-year basis.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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