Introduction
Learn why is ford stock so cheap in 2024 in this blogpost by evaluating its performance based on Revenue, Profit, EBITDA, and Free Cash Flow. Find out fair value estimates and growth prospects for Ford Motor Company (F) as the company evolves toward offering EVs.
Ford Motor Company, an industry leader in the automobile manufacturing industry, has been a prominent organization all over the world since many decades. However, while having an impressive history occupying a leading post, its stocks remain inexpensive in 2024. We will therefore give a comprehensive review of the Ford’s stock in this blogpost as we formally assess its revenues, net profit, EBITDA, and FCF. We shall also analyze the fair value of the company by using historical evidence and market data. Nevertheless no specific buy or sell call will be given, provided that it can bring out legal issues for the company.
What is Ford (F)?
Ford Motor Company was established in 1903 and it is a global automobile manufacturing company now. Currently, the company’s operations include designing, manufacturing, and selling cars, trucks, and SUVs. The company is strongly present in both electric vehicle (EV) and internal combustion engine (ICE) markets, operating across the globe including North America, Europe, and Asia. [1]
Businesses of Ford
The business operates through several major segments, which deal with different categories of the industry. Among them, Model e is the biggest one that guides Ford’s approach to electric vehicles and digital services. This segment is one of the keys for Ford’s transformation into a more sustainable automotive company, charged with an exploration of electric vehicles including the Mustang Mach-E, the F-150 Lightning and software services to support the interaction with and connectivity of the vehicles. [2]
Ford Blue is the traditional segment of ICE vehicles manufacture. Even now, when the trend is evolving into producing EVs, Ford still dominates the ICE market with products, such as the Ford F-Series and the Ford Explorer. This segment continues to be an essential source of revenue for Ford for development of future electric vehicles. [3]
Ford Credit is the credit division of the company that provides credit services to car purchasers and dealers. Functioning as the company’s sales enabler through making car ownership and leasing affordable, this division ensures demand across various categories. Find out about the big car giants BYD Stock Forecast – Fair Valuation in 2024
Last but not least, Ford Pro is Ford’s commercial vehicle brand, offering business users vehicles from utility to transportation fleets and related services. This segment also extrapolates fleet management solutions that can enable users to run their operations more effectively. Being the commercial vehicle an essential segment in Ford’s portfolio, Ford Pro is crucial for their development, especially in sectors such as logistics, construction, and public services.
Collectively, these segments place Ford in a strategic vantage to capitalize on its strengths in both incumbent and frontier domains of auto manufacturing – without negating the risks of electrification, while mastering the commercial and consumer automotive niches.
Cars of Ford
The following table outlines some of Ford’s most popular vehicles, showcasing its diverse range of cars, trucks, and SUVs:
| Car Model | Segment | Powertrain | Target Market |
| Ford F-150 | Trucks | Gasoline, Hybrid, Electric | North America |
| Ford Mustang | Sports Car | Gasoline, Hybrid | Global |
| Ford Bronco | SUV | Gasoline, Hybrid | North America |
| Ford Mach-E | Electric SUV | Electric | Global |
| Ford Transit | Commercial Van | Gasoline, Electric | Global (Commercial) |
| Ford Ranger | Mid-size Pickup | Gasoline, Diesel | Global |
Why is Ford Stock so cheap in 2024
Fair Valuation of Ford
Below, we present key financial metrics that contribute to Ford’s valuation and stock performance. The metrics help explain why Ford stock appears cheap in 2024.
| Metric | 2021 | 2022 | 2023 | TTM (Trailing 12 Months) | Relative Change (2021-TTM) |
| Revenue (in USD Mn) | 136,341 | 158,057 | 176,191 | 180,348 | +32.3% |
| Net Profit (in USD Mn) | 17,937 | -1,981 | 4,347 | 3,836 | -78.6% |
| EBITDA (in USD Mn) | 12,769 | 12,769 | 11,981 | 10,317 | -19.2% |
| Free Cash Flow (FCF) | 9,560 | -13 | 6,682 | 5,275 | -44.8% |
| EPS (USD) | 4.45 | -0.49 | 1.08 | 0.96 | -78.4% |
| Dividend Yield (%) | 0.5 | 4.3 | 4.9 | 5.5 | +1000% |
| Market Cap (USD Mn) | 85,593 | 46,758 | 48,796 | 43,648 | -49.0% |
| PE Ratio | 29.7 | 5.2 | 8.0 | 11.4 | -61.6% |
Revenue and Growth
Looking at the revenue of Ford for the years, from 2021 to the trailing twelve months (TTM) in 2024, there is an increase of 32.3%, from $136.34 billion in 2021 to $180.35 billion in 2024. This has been boosted by a strong demand for Ford’s electric vehicles (EVs), commercial vehicles as well as robust truck sales in the North American market. Nevertheless, this growth occurred side by side with increasing costs and disrupted supply chains which affected the bottom line. [4]
Net Profit and EPS Decline
Ford’s revenues recorded a slight increase in the TTM period, but its net income saw a drastic decline, reducing to $3.84 billion in the TTM from $17.94 billion in 2021. This decline can be a result of employee benefits, high production costs, inflation, restructuring and transformation to electric automobiles. Find out more about Fair value of Tesla Inc.
The EPS also made a downward trend from $4.45 in the prior year to $0.96 in TTM, down by -78.4%. The negative EPS in 2022 mainly owes to the fact that this year was a difficult one for Ford, witnessing losses connected with restructuring and supply chain problems.
EBITDA and Cash Flow
For the fiscal year 2021, the company’s EBITDA was $12.77 billion, but in 2024 it reduced to $10.32 billion, that is a decrease of 19.2%. These costs have increased the burden on the company and hence reduced the EBITDA as shown in the figure. The investment in the electric vehicle sector was crucial for future development but it has affected the current period’s earning’s figure.
The free cash flow (FCF) was down by 44.8% from $9.562 billion in the prior year to only $5.28 billion in the trailing twelve months (TTM). The negative FCF of the company in year 2022 also illustrated the problems related to cash flow when the company was restructuring and investing on EVs.
Dividend Yield and PE Ratio
The dividend yield for Ford has been rising in the recent years from 0.5% in 2021 to 5.5% in 2024. This is in line with the company’s effort to pay back dividends despite operating under very testing conditions. Ford investors like the ones focused on getting high dividends will find Ford stock with a higher dividend yield very promising and attractive.
The PE ratio, which has declined from 29.7 in 2021, to as low as 11.4 in 2024, shows that the price per stock is currently cheaper as compared to the earnings. A decline in the PE ratio indicates that stocks of Ford are current undervalued by referring to the company’s current earnings prospects, which may be driven by the market, including profitability issues and risks of restructuring.
Ford Price Prediction
Based on Ford’s financial data and historical growth, two potential fair value scenarios for the stock are:
Optimistic Scenario (2.26% Annual Growth):
Recapturing Ford revenue growth with an average annual growth rate of 2.26%, we get the $23 per share value of Ford stock. According to the optimistic scenario assumption, the current stock price is $10, this would mean that the stock has the potential of rising by 130%, which would imply tremendous upside if only Ford can effectively adapt to achieve its EV strategy and control cost smartly.
Conservative Scenario (0.86% Annual Growth):
If the revenue growth is only on an average of 0.86% per year then the fair value of Ford’s stock would be $21 per share, which means there is still an opportunity for an upside of 110%. While not as large as before, this estimate is somewhat lower, possibly because many companies are still struggling with supply chain problems or because the overall adoption of EVs happens at a slower pace.
Conclusion: Is Ford Stock Cheap in 2024?
In terms of PE ratio, dividend yield, and revenue growth in the 2024, it can be seen from the Ford’s valuation that it is undervalued. The model indicates that our positive forecast and the baseline forecast both represent a high potential for long-term appreciation from the current price, relative to the current market price, especially if Ford’s electrification strategy and several growth plans work out as intended.
However, there are likely risks that come with the growth and profitability of the electric cars such as supply chain risks, general competition in the EV industry, as well as the risk of having to maintain profitability. However, the current valuation and the prospect of growth are the reasons, which can be used to consider Ford as undervalued stock.
