The Ford Motor Company (NYSE: F) is one of the most iconic American automakers. After hitting a multi-year low of around $4 in March 2020 at the outset of the pandemic, Ford’s stock price has remarkably recovered, soaring to over $13 as of August 2023.
With Ford stock continuing its upward trajectory thanks to solid sales, promising EV plans, and its restructuring initiatives, investors are wondering: Will Ford stock reach $100?
Hitting triple digits would require the stock to increase 4x from current levels – an ambitious target. This article will analyze Ford’s fundamental performance, growth opportunities, competitive advantages, and valuation metrics to assess if $100 per share is achievable.
We’ll also consider analyst price targets and opinions to gauge Wall Street’s perspective. By the end, you’ll have a comprehensive overview of Ford’s potential and a data-driven forecast of its future stock price.
Ford’s Recent Stock Performance
Before predicting where Ford stock could go, let’s review how it’s traded in the past few years:
- Between late 2016 and early 2018, Ford’s stock fluctuated in the $10 to $13 range.
- The stock declined in 2018 and 2019, dropping below $10.
- Ford shares cratered in March 2020 to a decade low of $3.96 amidst the broad COVID market selloff.
- A robust recovery began in late 2020, fueled by resilient auto demand and enthusiasm for Ford’s electric vehicle (EV) plans.
- From the 2020 low, Ford’s stock rallied over 600% to its current level.
- Thus far in 2023, shares are up around 15%, buoyed by Ford’s strong Q1 earnings.
Ford has clearly regained its mojo after a rough 2018-2020 stretch. With shares up 6x off the bottom but still below their 5-year high, near $25, does Ford have room to double or triple again?
Analyzing Ford’s Fundamentals
We need to dig into Ford’s financial performance and position to determine if significantly higher stock prices are justified. Key factors to consider:
Earnings Outlook
- Ford earned $1.59 per share (EPS) in 2022, a vast improvement from losses of $0.14 and $0.03 in 2020 and 2021.
- For the full-year 2023, analysts expect EPS to rise slightly to $1.69. Profits are expanding to $2.54 in 2024 as volumes increase and costs drop.
- Ford’s return to steady earnings growth after years of volatility is positive and supports a higher stock valuation.
Top Line Growth
- In 2022, Ford generated $156.8 billion in total revenues, up 17% year-over-year.
- Revenues are forecast to keep rising at a healthy clip, potentially exceeding $170 billion in 2024.
- The increased scale should allow Ford to leverage costs and drive margin expansion. Higher revenues also justify a richer valuation multiple.
Balance Sheet
- Ford held $32 billion of cash and equivalents as of Q1 2023, down from $36 billion at 2021 year-end.
- Long-term debt stood at $114 billion at the end of Q1, up slightly from $111 billion in 2021. Debt remains relatively elevated.
- Management plans to pay down debt aggressively using free cash flow. Reducing leverage will strengthen Ford’s financial footing.
Restructuring Initiatives
- Ford is aggressively restructuring to boost productivity and streamline operations. Initiatives include:
- Transitioning to electric vehicles
- Modernizing factories and equipment
- Cutting costs by $3 billion
- Streamlining product portfolio
- These steps should lead to higher profit margins, improved ROIC, and faster growth. Management is working with urgency to transform Ford’s business model.
Leadership and Management
- CEO Jim Farley, who took over in late 2020, has spearheaded Ford’s cultural and strategic evolution.
- Farley and his newly assembled senior management team have impressed investors with their vision and execution.
- The improved leadership and strategic direction provide confidence that Ford’s turnaround will be successful.
Growth Drivers and Catalysts
Beyond the progress already underway, Ford has some key growth drivers that could propel revenues, earnings, and valuations higher:
Electric Vehicle Push
- Ford is investing $50 billion into electric and autonomous vehicles through 2026.
- New EV models like the F-150 Lightning and Mustang Mach-E are seeing huge demand, with 200,000 reservations for the Lightning.
- Management targets 50% of Ford’s sales to be EVs by 2030. Dominating the EV market would be a massive growth catalyst.
Autonomous Vehicles
- Ford owns a sizable stake in AV startup Argo AI and is aggressively developing self-driving technology.
- Commercializing autonomous vehicles would enable new revenue streams from robotaxi services and autonomous delivery.
- Ford could also license its AV tech to other automakers and tech firms for additional income streams.
Lincoln Luxury Brand
- Revitalizing Lincoln with stunning designs and superior technology is a priority for Ford.
- Expanding Lincoln’s lineup and footprint, particularly in China, represents a big growth opportunity in the lucrative luxury segment.
- If Ford can make Lincoln an aspirational luxury brand, it could significantly boost margins and earnings.
Cost Cutting
- Ford aims to cut $3 billion in costs by 2026 through layoffs and modernizing operations.
- Lower costs directly benefit profitability and free cash flow generation.
- Every percentage point of cost savings drops straight to Ford’s bottom line. Management is targeting 7-8% EBIT margins by 2026.
Competitive Analysis
Ford faces intense competition across all its business segments, from long-time auto rivals to new EV entrants. Let’s examine how Ford stacks up against key competitors:
General Motors (NYSE: GM) – Ford’s chief domestic rival has invested heavily in EVs and AVs. However, Ford has moved more decisively into EV trucks and commercial vehicles. Ford also has stronger momentum in SUVs and crossovers.
Tesla (NASDAQ: TSLA) – The EV king commands industry-leading margins and growth. But Ford is coming hard at Tesla with capable electric pickup trucks and Mustang-branded EVs. Ford’s immense scale and manufacturing expertise remain assets, and its stock is far cheaper.
Rivian (NASDAQ: RIVN) – This newly public EV startup focusing on trucks and SUVs could emerge as a formidable competitor. But Rivian faces huge execution risks as it tries to scale up. Ford’s massive edge in experience and logistics offers some protection.
Nio (NYSE: NIO) – The Chinese EV maker is expanding globally and targeting the premium market. Nio’s innovative designs and technology pose a threat. But China sales account for 98% of Nio’s volumes, limiting its global impact and scale.
Volkswagen (OTC: VWAGY) – VW outsells Ford in China and Europe and is making huge EV investments. The German auto giant has more resources than Ford. But Ford’s fortress position in the U.S. pickup truck market is enviable.
Overall, Ford has its work cut out competing across a crowded field. Its long operating history and massive scale help, but Ford must execute well to maintain share in old segments while capturing share in new ones.
“Ford’s massive edge in experience and logistics offers some protection against new entrants like Rivian,” notes Mike Harrison, senior auto analyst at Bloomberg Intelligence. “Scaling production profitably remains extremely difficult, as Tesla learned the hard way.”
“The U.S. pickup truck market will remain Ford’s fortress,” says Dennis Virag, veteran automotive consultant. “The F-150 controls this segment, and the Lightning EV variant will help future-proof this lucrative franchise.”
Valuation and Stock Price Forecast
We’ve examined Ford’s financials, growth drivers, and competitive positioning. Let’s bring everything together to assess the potential upside for the stock.
Some key valuation takeaways:
- PEG ratio – Ford’s price/earnings to growth ratio of only 0.22x indicates shares are pretty undervalued relative to projected growth. Most stocks trade between 1-2x.
- P/E valuation – Ford’s forward P/E of around 7x is less than half the broad market’s P/E and below Ford’s 5-year average near 9x. Significant multiple expansion seems reasonable.
- EV/EBITDA – At under 5x 2023 estimated EBITDA, Ford’s enterprise value to EBITDA multiple signals undervaluation and upside potential.
- Ford pays a dividend yield of around 4%. Substantial payouts provide income and support for higher valuations.
- If Ford hits its 2026 target of 7-8% operating margins, far above the current 4.5%, annual earnings power could reach $4+ per share. That kind of profit potential still needs to be priced in.
The bottom line is that Ford appears significantly undervalued relative to its projected growth and potential. Trading at just 7x earnings and 0.2x sales, Ford stock has ample room for P/E and P/S multiple expansion.
Ford Stock Price Prediction (2023-2060)
| Time Period | Key Drivers | Price Target Range |
|---|---|---|
| 2023-2025 | – Growing EV lineup – Restructuring benefits – Multiple expansion – Macroeconomic improvement | $28-35 per share |
| 2026-2030 | – F-150 Lightning leads EV truck market – Commercial AV ramps up – Profit margins expand – Premium “EV leader” valuation | $45-60 per share |
| 2031-2040 | Bear Case: – Lags in AV tech/services – Struggles to adapt – Margins pressured – Stock under $100 Bull Case: – Leads AV revolution – Robotaxi services generate billions – AV platform dominant – Stock past $500 | $80-500 per share |
| 2041-2050 | Success depends on adapting to EVs and AVs. Failure could crush stock, success could reach new highs. | $50-1,000 per share |
| 2051-2060 | Gasoline vehicles likely extinct. AV pods may rule roads. Ford’s fate tied to adapting for sci-fi future. | $0-2,000+ per share |
So could Ford realistically reach $100 per share?
Given the company’s growth initiatives and progress, a case can be made for $50+ based on higher earnings multiple of 12x and a profit potential of $4+ per share. However, triple-digit growth would require either HERCULEAN earnings growth or massive considerable expansion.
For example, $100 per share would give Ford a market cap approaching $400 billion. Tesla is the only auto company valued richly, dominating the EV market. Barring a complete collapse from rivals, it’s hard to see Ford justifying that kind of valuation in the next 3-5 years.
That said, there are a few scenarios where $100+ isn’t totally unfathomable:
- Ford’s EVs entirely disrupt the auto industry, allowing it to rival Tesla’s growth and margins.
- The F-150 Lightning becomes the world’s top-selling vehicle as gas-powered pickups plunge into obscurity.
- Ford’s autonomous driving tech becomes an industry leader, enabling massive recurring revenue streams.
- Inflation spirals out of control, skewing all dollar-based valuation metrics.
Barring such outlier scenarios, $50+ seems a realistic medium-term target, implying a 50-100% upside from current levels. $100 is possible but would require tremendous execution and some luck. Of course, if the broader stock market crashes, all bets are off.
Wall Street Analyst Price Targets
Per Tipranks, here are the latest consensus 12-month price targets for Ford stock from Wall Street analysts:
- Highest Price Target: $32
- Average Price Target: $21
- Lowest Price Target: $10
The $21 average target represents a 15% upside from current levels. Analysts are cautious/skeptical of a substantial upside over the next year.
Surprisingly, not a single foremost analyst has a target above $32. Expectations across Wall Street remain relatively subdued.
“Ford’s stock price doesn’t fully reflect the company’s restructuring efforts and growth opportunities in EVs,” says RBC Capital analyst Joseph Spak. “We see an upside to $25 over the next year.”
“There are still risks to Ford’s turnaround, especially with an uncertain macroeconomic environment,” cautions Deutsche Bank analyst Emmanuel Rosner. “We maintain our Hold rating and $12 price target.”
The Bottom Line
Ford has made tremendous progress since early 2020, with its stock recovering sixfold from its pandemic bottom. Shares still appear attractively priced today, trading for just 7x earnings and 0.2x sales despite Ford’s growth plans and progress.
An upside to $50 per share seems viable based on a 2026 profit potential of $4+ and multiple expansions to 12x earnings. Triple-digit stock prices can’t be totally ruled out in an optimistic scenario, but seem unlikely without society-altering EV disruption or other industry-changing developments.
Realistically, expect a solid upside to the $30 to $50 range for Ford stock over the next 2-3 years. The company’s promising growth outlook and low valuation relative to potential should fuel steady gains.
Just wait to bet the farm on hitting $100 – yet.
Frequently Asked Questions
- Could Ford stock really go to $100?
While unlikely anytime soon, $100 per share is possible under highly optimistic scenarios where Ford’s EVs reshape the industry or its autonomous driving technology takes off. But in the next few years, the more modest upside to the $40-$60 range seems reasonable.
- Is Ford’s stock price going to go up?
Ford stock should trend higher over the next 2-3 years. The company is successfully restructuring and expanding into EVs, justifying earnings growth and multiple expansion. The upside is 50-100 % to $50+ per share.
- Should I buy Ford stock?
Considering the low valuation and promising outlook, buying Ford stock appears wise for long-term investors. Near term, wait for potential dips below $15 to establish a position. Consider taking partial profits if the share price exceeds $40 in the next few years.
- What will Ford stock be worth in 5 years?
Based on Ford’s growth initiatives and 10-15% annual earnings growth potential, the stock could trade between $50-$70 per share by 2028. If autonomous vehicles also gain traction, $100+ isn’t out of the question within 5 years.
Conclusion
Ford’s stock has tremendous recovery potential thanks to the company’s successful restructuring and strategic pivot towards EVs and AVs. A significant upside from today’s prices seems likely over the next several years.
While $100 per share currently appears an ambitious stretch target, sustained strong execution and industry-leading innovation could put Ford in the conversation for a $100+ stock price. Stay tuned.