Ford Stock Up 40% in a Year & Still Looks Cheap: Should You Buy?

Core Insights - Ford's shares have increased over 40% in the past year, outperforming the industry, yet the company remains undervalued with a forward price-to-earnings ratio of 9.79, lower than its peers [1] Sales Performance - Ford's U.S. vehicle sales grew by 6% year-over-year to 2.2 million vehicles in 2025, marking its best annual performance since 2019, driven by strong demand for trucks, SUVs, and hybrids [4][6] - The Ford F-Series continued to be the best-selling truck in America in 2025, with Ford ranking as the third largest automaker in the U.S. by sales volume [4] Market Outlook - Experts predict a slowdown in auto sales for 2026 due to affordability challenges, tariff issues, policy changes, and weak electric vehicle adoption [5] Strategic Shifts - Ford is pivoting towards hybrids and gas models, canceling some EV launches due to softening demand and rising costs, including redesigning the F-150 Lightning as a hybrid [8][9] - The company sold a record 228,072 hybrid vehicles in 2025, a 21.7% increase, indicating a strong hybrid strategy amid weak EV sales [7] Ford Pro Unit - Ford Pro is a key growth driver, with strong demand for Super Duty trucks and rising subscriptions, which increased by 8% to 818,000 in Q3 [10] Energy Storage Initiative - Ford is launching a battery energy storage systems business, targeting a capacity of 20 GWh by 2027, with an investment of about $2 billion over the next two years [11] Autonomy and AI Integration - The company plans to introduce Level 3 autonomous driving by 2028 and is integrating AI technology into its mobile apps and vehicles starting in 2027 [12][13] Financial Position - Ford ended Q3 2025 with approximately $54 billion in liquidity, including $33 billion in cash, and has a high dividend yield of over 4%, targeting 40-50% of free cash flow for distributions [14] Investment Potential - Despite uncertainties in the auto market for 2026, Ford's strategic initiatives and strong liquidity position it well for future growth, with a Zacks Rank 2 (Buy) and a projected 31% EPS growth for 2026 [16][17]