Ford Motor (F) Could Be 21% Undervalued On Its EV Reset

Ford Motor (F) is back in focus after reports of nearly US$15b in operating losses in its electric vehicle unit and a US$19.5b special charge tied to an EV reset.

Ford Motor’s share price has slipped over the past quarter, with a 90-day share price return of an 11.15% decline and a 30-day share price return of a 5.90% decline, even as the stock delivers a 9.14% total shareholder return over one year and a 28.96% total shareholder return over three years.

Compare Ford Motor’s reset with a hand picked group of established businesses with sturdier balance sheets and fundamentals on our list of solid balance sheet and fundamentals (25 results) before you decide where the real resilience sits.

After this EV reset and a sliding share price, the real fork in the road is simple: lean into Ford Motor at today’s level, or wait and hope the valuation gets even more forgiving?

Most Popular Narrative: 21% Undervalued

Ford Motor’s most followed narrative pegs fair value at about $15.70 per share, compared with the latest close at $12.43. This leaves a sizeable valuation gap that hinges on execution in software, trucks, and a reset EV plan.

Ford Motor is building a larger base of high margin software subscriptions, with about 1.6 million paid subscriptions across the group, blended ARPU of around US$14 per month and contribution margins above 50%. This can increase recurring revenue and support earnings resilience if subscriber numbers and ARPU continue to grow. Ford Pro Intelligence has over 900,000 paid subscriptions and management expects each connected commercial vehicle to pull through several hundred dollars of parts and service revenue beyond the roughly US$10 monthly telematics fee. This can deepen customer lock in and support both revenue and net margins as the installed base expands.

See why 201 investors see Ford Motor as 21% undervalued.

Result: Fair Value of $15.70 (UNDERVALUED)

Still, the reset story for Ford Motor only holds if tariff pressure and political scrutiny of its Chinese battery ties do not erode margins or derail tax credits.

Find out about the key risks to this Ford Motor narrative.

Another View: Ford Motor Through A Cash Flow Lens

There is a different read on Ford Motor when the focus shifts from analyst targets to the SWS DCF model. On that framework, the estimated future cash flow value sits at about $10.66 per share while the stock trades around $12.43. That points to Ford looking overvalued on this metric and raises a simple question. Which story do you trust more: the cash flows or the narrative on margins and software?

To see how this model treats Ford Motor’s reset and capital spending, and how sensitive the result is to the inputs, Look into how the SWS DCF model arrives at its fair value.

Here is how that valuation lines up visually next to the current share price so you can judge the gap for yourself.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Ford Motor for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 33 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Conflicted by the push and pull in the Ford Motor story? Move quickly to test the numbers, weigh both sides, and decide where you stand with 3 key rewards and 2 important warning signs.

Looking for more Ford Motor investment ideas?

Do not stop at Ford Motor. Use the Simply Wall Street Screener to uncover fresh opportunities and keep your watchlist working as hard as your capital.

• Target resilient businesses with cleaner finances by scanning a list of solid balance sheet and fundamentals (25 results) that can help you stress test your portfolio against tougher conditions.
• Hunt for quality at a reasonable price through a 33 high quality undervalued stocks that filters for fundamentals, not hype, so you stay focused on substance.
• Stack potential income streams by reviewing a 8 dividend fortresses that highlights higher yielding payers with the strength to keep distributions on the table.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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