Where Will Ford Motor Company Be in 1 Year?

Core Viewpoint - Tariffs and trade policy uncertainties under the Trump administration are significantly impacting Ford Motor Company and the broader automotive industry, raising concerns about pricing, international sales, and overall profitability [1][2][4]. Impact of Tariffs - Tariffs threaten to increase vehicle prices for U.S. consumers, as Ford assembles about 80% of its vehicles domestically but relies on a global supply chain for parts [4]. - The company is extending employee pricing on most vehicles to stabilize prices, which may pressure profits [4]. - Retaliatory trade policies could adversely affect Ford's international sales, with approximately half of its 4.47 million units sold in 2024 going to non-U.S. markets [5]. Business Model Challenges - The automotive industry is already facing challenges, including high competition, expensive manufacturing, and sensitivity to economic conditions [7]. - Ford's earnings per share have only increased by about 90% since the mid-1980s, indicating a lag behind broader market performance [8]. Dividend Considerations - Ford's current dividend yield is 6.5%, with a payout of $0.60 per share, which is manageable given the company's earnings [10]. - However, potential tariff pressures could lead to a reevaluation of the dividend, as management may cut it to conserve cash during tough economic times [13]. Market Valuation - Ford's price-to-earnings ratio is just under 7 based on 2025 estimates, reflecting the risks associated with tariffs and the automotive industry's struggles [14]. - The market lacks reasons to value Ford's stock higher amid ongoing trade tensions, suggesting limited potential for stock appreciation in the near term [14].