Could Buying Ford Stock Today Set You Up for Life?

Key Points

• Ford’s pro segment is posting strong growth and a double-digit operating margin, a bright spot for the business.

• Due to the nature of new car purchases, Ford will always face demand cyclicality.

• Ford stock’s track record is quite disappointing, especially when compared to the broader S&P 500.

• 10 stocks we like better than Ford Motor Company ›

Ford (NYSE: F) is having a wonderful year. As of Sept. 5, shares have climbed 18% in 2025. That's a much better showing than premium industry peer Tesla, which is down 14%. Even consumer electronics leader Apple can't compare, as its shares have fallen 5%.

There's certainly momentum working in Ford's favor. Could buying this auto stock today set you up for life?

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Ford's best qualities

Ford has a few bright spots under the hood. The most obvious is the success of Ford Pro, which serves commercial customers. Revenue was up 11% year over year in Q2. And it posted a solid operating margin of 12.3%. The hope here is that it can boost recurring revenue, while giving Ford a stronger position in software and services.

The company's Model e segment, which houses electric vehicles (EVs), continues to report huge operating losses. However, it's growing, with unit volumes up 19.3% year over year in August. Perhaps if Ford reaches scale, EVs could start to be accretive to the bottom line.

The stock is very cheap, trading at a forward price-to-earnings ratio of 8.6. Any fundamental improvements could drive market enthusiasm, sending the multiple higher. This setup also makes for a hefty dividend yield of 5.13%. Income investors might find this situation interesting.

Ford's durability is another notable quality. The business has been around for over 120 years. It has been a high-profile contributor to the U.S. economy, mainly because it employs a whopping 171,000 people (as of year-end 2024). And it has the best-selling vehicle for 48 straight years, the F-Series line of pickup trucks. These points support the idea that Ford will be around for decades.

Easy to be bearish

Ford might give a small subset of the investment community reasons to be bullish. However, the factors that point to this company making for a terrible investment opportunity hold much greater weight.

Low growth and weak profits are two alarming traits Ford possesses. The company's revenue in 2024 was just 28% higher than it was in 2014. And given the maturity of the auto industry, it's difficult to see Ford's sales posting significant gains.

On the profitability front, Ford's operating margin has averaged an abysmal 1.9% in the past decade. There has been no evidence of economies of scale taking over, a favorable setup where a business can better leverage its expenses as its revenue increases. Ford's costs for parts, labor, and manufacturing, for instance, will always be high. And they could keep experiencing inflation going forward, eating away at the company's bottom line.

The best businesses, at least in my opinion, are those that sell small, repeat purchases. This is precisely why the market loves companies that offer subscription services. Revenues are stable and predictable. And customers are not as sensitive to economic forces.

It's clear that Ford is the opposite. Cars are big financial purchases, second only to buying a house in importance. When the economy worsens, consumers will undoubtedly think long and hard about adding a new vehicle to the garage. They could delay purchases until interest rates drop and consumer confidence rises. Instead, they'll invest money into maintaining their existing cars. That cyclicality is a detrimental characteristic.

Ford isn't a smart investment

Ford isn't a smart investment to make today. The chances that it can outperform the S&P 500 over the long term are extremely slim. History provides support for this view. In the past decade, Ford has generated a total return of 49% (as of Sept. 5). At the same time, the S&P 500's total return of 304% would've turned $10,000 into more than $40,000 over that 10-year stretch. There's no reason to believe this trend of underperformance will change.

Therefore, it shouldn't come as a shock to anyone that Ford won't set you up for life. The company has long been a leader in the domestic auto industry, but it has not been the best when it comes to compounding shareholder capital.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Tesla. The Motley Fool has a disclosure policy.