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On Wednesday, Citi initiated coverage on Ford Motor Company (NYSE:F) with a Neutral rating and established a price target of $10.00. The firm cited several factors that have kept the stock range-bound over the past three years, including uneven production in North America, increased warranty accruals, and significant losses in battery electric vehicle production. These issues have led Citi to believe that Ford’s guidance may remain uncertain until there is more clarity on tariffs, which could potentially reduce the company’s performance by $2-3 billion. According to InvestingPro data, Ford currently trades at a P/E ratio of 6.5x, suggesting a relatively low earnings multiple. The company maintains a Fair Value that indicates the stock is currently fairly priced.
In the first quarter, Ford’s earnings in North America are expected to be negatively impacted by a changeover at key production facilities. InvestingPro analysis reveals that Ford’s dividend yield has actually increased to 7.77%, with the company maintaining dividend payments for 14 consecutive years. The company has historically paid a year-end extra dividend for the past three years. Ford’s Class B shares, which are exclusively held by Ford Family members and represent 40% of the voting power, were reported to be 70.9 million in number as of the beginning of February, accounting for 1.8% of total shares outstanding.
Ford has faced challenges with some of its key products in North America, including delayed launches and quality issues. Pretax income from global auto operations fell to $9.2 billion in 2024 from $10.0 billion in 2023, and Citi forecasts a further decline to $5.7 billion in 2025. Despite these challenges, there are positives in Ford’s financial situation. The company ended 2024 with a net cash balance of $7.7 billion and is expected to generate $3.4 billion in surplus operating cash in 2025 and $4.9 billion in 2026. Additionally, Ford Credit is projected to contribute $2 billion in pretax income, and Ford’s commercial truck segment, Ford Pro, continues to lead the North American market. InvestingPro data shows the company maintains a "Fair" overall financial health score, with particularly strong relative value metrics.
In terms of valuation, Ford is currently trading at 3.5 times the expected 2025 results on an EV/EBITDA basis, which aligns with the targeted range set by Citi. This valuation reflects the mixed financial outlook and operational challenges faced by the company. Recent InvestingPro data shows Ford’s EV/EBITDA ratio at 14.8x, with the company maintaining a price-to-book ratio of 0.86x, suggesting potential value opportunities for investors looking at traditional metrics.
In other recent news, Ford Motor has halted the export of its luxury vehicles to China due to a significant increase in tariffs, a result of the ongoing trade tensions between the U.S. and China. The affected vehicles, including the F-150 Raptors and Lincoln Navigators, have seen tariffs rise to as much as 150%, prompting the automaker to stop shipments. Meanwhile, Ford’s U.S. vehicle sales for the first quarter of 2025 showed a slight decrease of 1.3%, with a total of 501,291 vehicles sold. Notably, sales of electrified vehicles, including hybrids and fully electric models, grew by 25.5%, while internal combustion vehicle sales fell by 4.8%.
In related automotive industry news, Deutsche Bank (ETR:DBKGn) has downgraded General Motors (NYSE:GM)’ stock from Buy to Hold, adjusting the price target from $58.00 to $43.00. The downgrade reflects concerns over structural uncertainties in U.S. industrial and tariff policies. The analysts at Deutsche Bank expect General Motors to report strong first-quarter results, but they anticipate the company will retract its full-year guidance due to tariff challenges. Additionally, the National Highway Traffic Safety Administration has announced a recall of approximately 105,322 Ford Expedition and Lincoln Navigator (ELI:NVGR) SUVs over seat belt concerns. This recall affects models from 2018 to 2020, with dealers set to inspect and replace affected parts at no cost to owners.
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