Is Ford's Stock Run Justified as Trump Considers Major Tariff Relief?

If you’ve been watching Ford Motor’s stock, you know how much of a rollercoaster it can be. The shares are coming off a strong run lately, with gains of 4.8% over the past week, nearly 8% in a month, and an impressive 31.3% year-to-date. For longer-term holders, that 115.2% climb over the last five years is hard to ignore. But what is actually driving these moves, and what should you make of Ford’s current price tag?

There is no shortage of action in the headlines. Ford, along with rivals, is adapting fast as the auto sector grapples with shifting EV incentives and looming changes to tariffs. Just recently, talk of potential tariff relief for U.S. auto manufacturers sparked speculation about a friendlier environment for the industry. This possibly justifies some of Ford’s recent momentum. On the other hand, big policy shifts, such as the end of federal tax credits for EVs, have forced Ford and others to rethink production and incentives to keep customers engaged. That mix of opportunity and challenge is exactly why Ford’s stock has bounced around so much lately. Investors seem to be weighing new growth potential against evolving risks almost day by day.

So is Ford actually a bargain at these levels? Using a range of traditional valuation screens, Ford scores a 3 out of 6 for being undervalued. Not bad, but not quite an all-clear. Next, let’s break down the numbers behind that valuation score and discuss what it suggests for Ford’s outlook. Before moving to a more nuanced approach, this could give you an even better handle on whether this stock truly deserves a place in your portfolio.

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 by forecasting its future cash flows and then discounting those projections back to their value today. This approach gives a clearer picture of the business's underlying worth by focusing on cash generation, not just reported profits.

For Ford, the latest reported Free Cash Flow (FCF) stands at $10.0 Billion. While analysts provide detailed forecasts for the next five years, projections beyond that rely on extrapolation based on recent trends. Specifically, Ford's FCF is expected to shift from about $5.9 Billion in 2027 to roughly $4.0 Billion by 2035. This suggests generally declining free cash flow over the long run, which weighs on Ford's intrinsic valuation using this method.

According to the DCF analysis, Ford’s estimated intrinsic value per share is $9.98. With the current market price about 26.9% above this valuation, the stock screens as overvalued based on its future cash flow prospects.

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 26.9%. Find undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Ford Motor Price vs Earnings

Price-to-Earnings (PE) ratio is widely regarded as a relevant valuation tool for profitable companies such as Ford, because it directly compares the price investors pay to the company's reported earnings. This metric is especially useful when the business is consistently generating profits, as it helps gauge whether the current stock price reflects expected returns.

Growth expectations and risk are key drivers of what is considered a “normal” or “fair” PE ratio. Rapidly growing companies or those with predictable earnings tend to justify higher PE multiples, while more volatile, slow-growing, or risk-exposed businesses typically see lower ratios.

Ford currently trades at a PE ratio of 16x. In comparison, the auto industry’s average is 18x, and its peer group averages about 18x as well. At first glance, this suggests Ford is priced slightly below its competitors on an earnings basis. Looking further, the proprietary “Fair Ratio” calculated by Simply Wall St takes into account Ford’s specific growth outlook, margins, industry context, market cap, and risk profile. For Ford, the Fair Ratio is 20.7x.

The Fair Ratio provides a more nuanced benchmark than industry averages because it tailors expectations by weighing multiple company-specific factors that peers and sector means often overlook. This individualized approach helps reveal when a company’s valuation stands out for good reason, or not.

With Ford’s actual PE of 16x sitting noticeably below its Fair Ratio of 20.7x, the stock appears undervalued on this measure. Investors may be discounting Ford's potential more than the fundamentals warrant.

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 is an even better way to understand valuation. Let’s introduce you to Narratives, a dynamic, user-friendly tool that lets you tell your story about Ford by connecting your assumptions about future revenue and margins to a fair value, all grounded in financial forecasts.

A Narrative is simply your personal perspective, built by combining the company’s business story, your expectations for its future, and the numbers to back it up. This forms the basis for your fair value estimate, turning abstract projections into tangible investment insights.

On Simply Wall St’s Community page, used by millions of investors, Narratives make it easy to see and compare real investor viewpoints, helping you decide what Ford is truly worth to you and when it might be time to buy or sell by comparing an automatically calculated Fair Value to the current Price.

What makes Narratives especially powerful is that they stay up to date as the facts change. Whenever new earnings reports, news, or industry shifts come in, your Narrative evolves in real time.

For example, one investor might believe Ford will struggle to grow profit margins above 3% due to rising labor costs and set a fair value at $9.70. Another, more optimistic investor expects digital revenues and EV platforms to push earnings much higher, valuing Ford at $11.15. This highlights how the same company can look like a bargain or a risk depending on your Narrative.

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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