TLDR:
- Ford’s Q1 2025 earnings are expected to show a loss of $0.02 per share, down from $0.49 profit last year
- The stock has underperformed, falling 35.2% over the past 52 weeks compared to the S&P 500’s 4.2% loss
- Potential 25% tariffs on Mexico/Canada imports threaten Ford’s operations as 17% of North American production is in these countries
- Despite dividend yield of 6.5%, tariff pressures could force a dividend cut as earnings forecasts are revised downward
- Ford trades at a P/E ratio under 7 based on 2025 estimates, reflecting market concerns about tariffs and industry headwinds
Ford Motor Company is set to announce its first-quarter 2025 earnings on Monday, May 5, after market close. Wall Street expects disappointing results, with analysts projecting a loss of $0.02 per share compared to a profit of $0.49 in the same quarter last year.
The automaker’s stock has struggled recently, dropping 35.2% over the past year while the broader market fell just 4.2%. This underperformance comes as tariff concerns weigh heavily on the company’s outlook.
The Trump administration’s trade policies pose a particular threat to Ford. Proposed 25% tariffs on imports from Mexico and Canada could hit Ford hard since 17% of its North American production comes from these countries.
Tariff Impact on Operations
Ford executives have been vocal about these challenges. While the company assembles about 80% of its vehicles in the United States, it relies on a global supply chain for parts and components that could be subject to tariffs.
In response to pricing pressures, Ford has extended employee pricing on most of its vehicle lineup. This move essentially amounts to a price cut that could squeeze profit margins.
The tariff situation creates a double problem for Ford. Higher component costs could raise vehicle prices domestically, while retaliatory tariffs from other countries might hurt international sales.
Ford sold approximately half of its 4.47 million vehicles in 2024 to markets outside the U.S., including China (442,000), Canada (269,000), the United Kingdom (242,000), and Germany (155,000).
Recent Financial Performance
Looking back at Ford’s most recent earnings report from February 5, the company posted better-than-expected results. Revenue came in at $48.2 billion, exceeding analyst estimates of $45.7 billion.
The company reported adjusted earnings per share of $0.39, also beating forecasts of $0.32. Despite these positive results, Ford shares fell more than 7% in the following trading session as investors focused on future concerns.
For the full year 2025, analysts now expect Ford to report earnings of $1.34 per share, down 27.2% from $1.84 in fiscal 2024. They project a modest recovery in 2026, with EPS rising 14.2% to $1.53.
Dividend and Valuation Concerns
Many investors hold Ford stock for its dividend, which currently yields about 6.5%. The annual payout of $0.60 per share represents only one-third of the company’s 2024 earnings.
However, Ford has a history of cutting its dividend during challenging economic periods. The current tariff situation could force management to reconsider the payout to preserve cash.
The stock now trades at a price-to-earnings ratio of just under 7 based on 2025 estimates. This low valuation reflects the market’s concerns about tariff risks and industry challenges.
Analyst sentiment on Ford stock remains cautious. Of the 23 analysts covering the company, four rate it a “Strong Buy,” 14 give it a “Hold,” one suggests a “Moderate Sell,” and four recommend a “Strong Sell.”
The average analyst price target stands at $9.73, suggesting a potential upside of 12% from current levels. This modest target indicates limited optimism about the stock’s near-term prospects.
The broader automotive industry faces ongoing challenges beyond tariffs. It requires expensive factories, constant financial investment, and remains highly sensitive to economic cycles as vehicles represent major purchases for most consumers.
Ford’s earnings have historically been volatile, with profitable years often followed by significant losses during recessions or other crises. The company’s earnings per share have increased by only about 90% since the mid-1980s, causing the stock to lag the broader market over that period.
As the global trade situation continues to evolve, investors may need to temper expectations for Ford’s stock performance in the coming year unless there’s a substantial shift in trade policies.
The company’s next earnings report on May 5 will be closely watched for signs of how these tariff concerns are affecting operations and for any guidance about future performance in this challenging environment.
