Key Takeaways Ford's 0.26X forward P/S is below its 5-year average and peers GM and Tesla despite a YTD stock gain. Ford Pro's strong demand, paid software growth and Super Duty launch drive optimism for future earnings. EV losses, ICE slowdown and $1.5B in tariff impact weigh on Ford's 2025 earnings outlook and estimates.U.S. legacy automaker Ford (F) is currently trading at a 0.26 forward 12-month price-to-sales (P/S) ratio, below the industry levels as well as its own 5-year average. The valuation also ...

Core Insights - Ford and Toyota are major competitors in the global auto industry, with Toyota holding a significant lead in global sales and market capitalization [1][2] - In the U.S. market, Toyota sold 2.33 million vehicles in 2024, a 3.7% increase, while Ford sold 2.07 million vehicles, up 4.2% year over year [1] - On a global scale, Toyota sold 10.8 million vehicles compared to Ford's 4.5 million, with Toyota's market cap at approximately $250 billion versus Ford's $40 billion [2] Ford's Position - Ford remains a key player in the U.S. auto market, with popular models like the F-Series trucks and a strong presence in the SUV and crossover segments [6] - The company's hybrid strategy is gaining traction as full EV adoption slows, appealing to consumers seeking better fuel efficiency [7] - Financially, Ford exited Q1 2025 with $27 billion in cash and $45 billion in liquidity, allowing for investments in digital innovation and electrification [8] - Ford's dividend yield is approximately 6%, significantly higher than the S&P 500 average, with plans to return 40-50% of free cash flow to shareholders [8] - The Ford Pro business, focused on commercial customers, is expected to drive earnings growth due to strong demand and successful product launches [10] - Challenges include declining sales in traditional gas-powered vehicles, significant losses in the EV division, and potential tariff impacts costing up to $2.5 billion [11][12] - The Zacks Consensus Estimate predicts a 7% decline in sales and a 40% decline in EPS for Ford in 2025 [13] Toyota's Position - Toyota is recognized for its reliability and has exceeded earnings expectations, projecting growth in revenues and vehicle volumes for fiscal 2026 [14] - The company anticipates a 21% decline in operating income due to rising material costs, currency headwinds, and potential tariff impacts [15] - Toyota expects to sell 9.8 million vehicles in fiscal 2026, an increase from 9.36 million in fiscal 2025, with a focus on hybrid and plug-in hybrid sales [16] - The hybrid-first strategy is exemplified by the RAV4, which will be sold exclusively as a hybrid or plug-in hybrid starting in 2026 [17] - Toyota raised its annual dividend to 90 yen per share for fiscal 2025 and plans to increase it to 95 yen for fiscal 2026 [18] - The Zacks Consensus Estimate indicates an 8% growth in sales for Toyota in fiscal 2026, while earnings are expected to decline by 21% [18] Capital Efficiency and Valuation - Toyota has a return on invested capital of 4.8%, significantly higher than Ford's 1.77%, indicating better capital efficiency [19] - On a valuation basis, Toyota trades at a more attractive EV/EBITDA multiple compared to Ford, suggesting a more reasonable stock price relative to earnings [21] Conclusion - Both Ford and Toyota are navigating challenges in the evolving auto industry, with Ford having strong brand recognition and a high dividend yield, while Toyota benefits from global scale and a cautious electrification strategy [23][24] - Toyota's stronger capital discipline and strategic positioning provide it with a slight edge over Ford in the current market landscape [25]

Core Viewpoint - Ford Motor is increasing prices on three models produced in Mexico due to the impact of President Trump's tariffs, marking a significant adjustment in the automotive market [1][4]. Price Adjustments - Prices for the Mustang Mach-E electric SUV, Maverick pickup, and Bronco Sport will rise by up to $2,000 on certain models, effective May 2 [1][4]. - The price hikes will apply to vehicles built after May 2, which are expected to reach dealer lots by late June [5]. Financial Impact - Ford anticipates that Trump's trade war will add approximately $2.5 billion in costs by 2025, but it aims to mitigate this by around $1 billion [2][9]. - General Motors projects that tariffs could cost between $4 billion and $5 billion, with an expectation to offset at least 30% of that cost [4]. Market Position - Ford has a stronger domestic manufacturing base, assembling 79% of its US-sold vehicles domestically, compared to GM's 53% [10][12]. - Despite this, Ford imports the Maverick, one of its most affordable models, from Mexico, which exposes it to tariff-related price increases [11]. Industry Context - The automotive sector is experiencing uncertainty due to tariffs, leading to revised forecasts and production shifts among major carmakers [6]. - Analysts suggest that US auto sales could decline by over 1 million vehicles annually if tariffs remain in place [9].