How Will Ford’s F-150 Rate Cuts Impact Its Current Share Price?

Thinking about what to do with Ford Motor stock right now? You are not alone, and there is plenty to consider. Ford’s share price has been on a bit of a rollercoaster lately. After a slow 30 days, up only 0.8%, a burst of momentum in the past week has driven a stronger 3.4% gain. Year-to-date, the stock has surged 24.5%, and if you zoom out to five years, that jump hits an eye-opening 127.1%. Clearly, investors are noticing something, whether that is increased growth potential, shifting market dynamics, or perhaps changes in perceived risk.

Recent news headlines have played their part. Ford is targeting more buyers by lowering rates on its best-selling F-150 pickups for people with weaker credit, which could spark sales growth. At the same time, the company is contending with softer electric vehicle demand in Europe, leading to job cuts at its Cologne plant, as well as similar moves in South Africa. These strategic decisions reflect Ford’s efforts to stay flexible amid rapidly changing industry headwinds and opportunities.

With all this activity, the question on everyone’s mind is whether the current share price reflects Ford’s true value. Our deep dive into six key valuation checks shows Ford is undervalued in three, giving the company a valuation score of 3. But traditional valuation methods only tell part of the story. Next, we will break down these approaches and reveal a more powerful way to look at what Ford is really worth.

Why Ford Motor is lagging behind its peers

Approach 1: Ford Motor Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value based on projections of its future cash flows, which are then discounted back to today's dollars to reflect their present worth. This method aims to determine the intrinsic worth of a business by focusing on its ability to generate cash over time, rather than solely on reported profits.

For Ford Motor, the current Free Cash Flow (FCF) stands at approximately $10.01 billion. Analysts provide FCF projections up to five years into the future, forecasting a decrease to $5.93 billion by 2027. Beyond that, cash flows are extrapolated, showing a gradual decline over the next decade. Projected FCFs include $4.41 billion in 2029 and $4.11 billion in 2030, reflecting modest negative growth rates year over year.

Based on these projections and using a 2 Stage Free Cash Flow to Equity model, the estimated fair value per Ford share is $9.98. When compared to the current share price, this valuation indicates the stock is about 20.3% higher than what the DCF model suggests is fair. In simple terms, Ford stock appears overvalued according to this approach.

Result: OVERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ford Motor.

Our Discounted Cash Flow (DCF) analysis suggests Ford Motor may be overvalued by 20.3%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Ford Motor Price vs Earnings

When analyzing profitable companies like Ford Motor, the Price-to-Earnings (PE) ratio is a time-tested metric for evaluating value. The PE ratio tells investors how much they are paying for a dollar of the company’s earnings, making it straightforward to compare across the sector or market. Ideally, companies with higher expected growth or lower risks command higher PE ratios. Those facing bigger uncertainties or slower prospects trade at lower multiples. Determining what a “fair” PE should be often involves factoring in these expectations alongside profitability and company size.

Ford’s current PE ratio is 15.2x. This figure sits below both the industry average of 18.0x and the peer average of 17.7x, suggesting the market is pricing Ford’s earnings more cautiously. However, a straight comparison with these benchmarks can be misleading since it may not reflect Ford’s unique growth outlook, margins, or company-specific risks.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio for Ford is calculated at 20.9x, a level that considers the company’s expected earnings growth, profit margins, industry dynamics, market size, and risk factors. Because it blends these key ingredients, the Fair Ratio offers a richer, more tailored benchmark than any simple industry or peer average. In Ford’s case, the current PE is meaningfully lower than its Fair Ratio, pointing to a market that undervalues the company given its fundamentals and prospects.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Ford Motor Narrative

Earlier we mentioned that there’s an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, dynamic story that connects your perspective on a company, such as what you think about Ford's future growth, risks, margins, or market opportunities, directly to a financial forecast and a fair value estimate grounded in your assumptions.

Instead of focusing just on static numbers or analyst averages, Narratives empower you to articulate your personal view, creating a bridge between the company’s evolving story and its projected performance. On Simply Wall St’s Community page, millions of investors are already using Narratives to set, compare, and update their investment cases in an intuitive and accessible way.

As new news or earnings are released, Narratives automatically reflect the latest information, making it easy to see how your investment thesis stacks up in real time. Narratives help guide your buy, hold, or sell decision by clearly comparing each Fair Value with the current Price, so you can spot opportunities or risks quickly and confidently.

For example, some Ford investors see opportunity in higher-margin digital subscriptions and set a bullish Narrative Fair Value of $16.00 per share, while others worry about rising labor costs and place theirs much lower, around $8.00. This demonstrates how Narratives capture the full spectrum of market perspectives with real numbers behind every story.

Do you think there's more to the story for Ford Motor? Create your own Narrative to let the Community know!

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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