Ford Motor Company is set to report its latest quarterly financial results after U.S. markets close on May 5, 2025. With the backdrop of escalating global trade tensions and newly implemented tariffs by President Donald Trump’s administration, investor uncertainty has reached a new high. Many are now asking the critical question: should you buy Ford stock before earnings are released?
In this article, we’ll explore that question by taking a closer look at Ford’s recent financial performance, the evolving electric vehicle (EV) landscape, potential impacts from tariffs, labor force dynamics, and conclude with a proprietary discounted cash flow valuation model to determine the intrinsic value of Ford shares.
Ford’s Last Earnings: Revenue Growth, But Weak Free Cash Flow
When Ford last reported results, the company posted quarterly revenue of $48.2 billion—up 5% year-over-year. On the surface, that looks like solid progress. Even more impressive was the 103% surge in adjusted EBIT (earnings before interest and taxes), which jumped to $2.1 billion. However, we should be careful not to take that number at face value. The outsized growth is partially a result of weak comparisons from the same quarter in the prior year. In other words, the business didn’t suddenly become twice as profitable—it simply recovered from a weaker baseline.
Ford’s adjusted free cash flow came in at $700 million. While positive, this represents just a small fraction—roughly 1.5%—of the $48.2 billion in revenue. That is not an especially strong conversion rate, particularly when you consider the capital-intensive nature of the auto business. Every car produced requires significant upfront investment in raw materials, manufacturing infrastructure, and R&D. Even modest free cash flow margins suggest operational headwinds.
Segment Breakdown: The Good, The Bad, and The Electrified
Ford organizes its business into three major segments:
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Ford Blue – Traditional internal combustion engine (ICE) vehicles for consumers.
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Ford Model E – Electrified vehicles, including EVs and hybrids.
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Ford Pro – Commercial fleet and business-focused offerings.
Ford Blue and Ford Pro continue to be the backbone of the company’s profitability. Each segment generated $1.6 billion in operating income in the most recent quarter. Unfortunately, those gains are being offset by substantial losses in the Model E segment.
In fact, Model E posted an operating loss of $1.44 billion in just one quarter. Annualized, that’s nearly $6 billion in losses. While some of this investment is strategic—fueled by government mandates and long-term EV goals—the pace of those losses is unsustainable if sales growth doesn’t accelerate. Ford is effectively being forced into an expensive EV transition by regulatory pressures, without strong enough consumer demand to support the economics of that shift.
Sales Trends: EVs Growing, But Not Fast Enough
Looking ahead to Q1 2025 earnings, we already have some sales data to work with. Ford has released its total vehicle sales numbers, which showed a 1.3% year-over-year decline to 51,291 units. However, that overall decline masks key internal shifts:
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Hybrid vehicles sales increased by 33%
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Fully electric vehicle (EV) sales rose by 11-12%
While those are solid growth numbers, especially in a challenging macro environment, they’re not enough to offset broader declines in ICE vehicle sales. More importantly, the EV segment—despite growing—is still posting major operating losses.
It’s also worth noting that hybrid vehicles are seeing a surge in demand worldwide. Consumers, wary of the limitations of full EVs (such as charging infrastructure, cost, and range anxiety), are finding hybrids to be a practical middle ground. This could lead to a strategic re-emphasis on hybrid development, even as Ford and other automakers were laser-focused on EVs just a year or two ago.
Tariff Impacts: A New Set of Headwinds
President Donald Trump’s newly reintroduced tariffs, aimed at boosting U.S. manufacturing and reducing reliance on foreign imports, are already beginning to affect companies like Ford. While Q1 sales may reflect early signs of this policy change, the full brunt of the tariffs is expected to hit in Q2 and Q3 2025.
Tariffs increase the cost of imported parts and materials, which directly affects automakers—even those with substantial U.S. manufacturing. The modern auto supply chain is global. Many key components are sourced from Europe, China, and Mexico. Higher input costs will either erode margins or be passed onto consumers, potentially reducing demand.
There’s also a second-order effect: labor dynamics. If automakers can no longer credibly threaten to move manufacturing offshore, domestic labor unions may have stronger leverage during contract negotiations. We’ve already seen this with the UAW strikes last year. If workers feel more secure, they are likely to demand a larger share of corporate profits, putting additional cost pressure on margins during good times—yet remaining rigid during downturns.
Valuation: Is Ford Overvalued?
Let’s now turn to valuation. Using my proprietary discounted cash flow (DCF) model, I estimate Ford’s intrinsic value per share at $5. As of this writing, Ford stock trades around $9.63, which implies the stock is overvalued by approximately 85%.
This valuation takes into account:
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Modest long-term revenue growth of 2–3%
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Compressed profit margins due to labor and input cost pressures
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Weak free cash flow conversion
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High capital reinvestment needs
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Rising risk premium due to regulatory and macroeconomic uncertainty
Even if Ford surprises on earnings, the margin of safety is not compelling at current levels. And unfortunately, Ford also scores poorly on the other five metrics in my six-step investing framework (outlined in my book, linked in the description below). These include qualitative factors such as industry dynamics, return on invested capital, and competitive advantages.
Conclusion: Ford Is a Hold Ahead of Earnings
So, should you buy Ford stock before the company announces earnings on May 5th?
Based on the evidence: No. While Ford is a strong legacy brand and is navigating an extremely difficult transition to electrification, it remains stuck in a structurally unattractive industry. The business is capital-intensive, highly cyclical, labor-constrained, and now—tariff-exposed.
Ford's EV efforts are producing growth, but at significant cost. And its traditional ICE segment is slowly shrinking. The valuation is not cheap enough to justify the risks, especially when you factor in macro headwinds and margin compression.
Therefore, I am rating Ford stock as a HOLD. There’s no need to panic sell—it’s unlikely Ford goes bankrupt or suffers catastrophic losses in the near term. But if you’re looking for a compelling entry point with strong upside, this isn’t it.
Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.
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