Is Ford Motor Stock a Buy After Its Latest Earnings Report?

Despite a slight miss on revenue, shares of Ford Motor Co.traded more than 3% higher as of 1:13 p.m. ET today after the company raised its full-year guidance.

In the second quarter, Ford reported adjusted earnings per share of $0.42, $0.07 higher than Wall Street consensus estimates. Revenue of $44.89 billion missed estimates of $45.86 billion.

Still, investors breezed past the revenue miss after the U.S. automaker raised its full-year adjusted EBIT guidance to between $10 billion and $11 billion, up from a prior range of $8.5 billion to $10.5 billion.

Ford also raised its full-year free cash flow guidance to between $6 billion and $7 billion, up $1 billion from its prior guided range.

Is Ford stock a buy after the positive earnings report?

Image source: The Motley Fool.

Improvements in several areas of the business

Ford’s Blue division, the company’s gas and hybrid division, saw revenue of $26.1 billion in the quarter, up slightly on a year-over-year basis and over $2 billion from the prior quarter. EBIT of $1.1 billion also rose by about $400 million from the prior year.

Ford Blue continues to be powered by the company’s F-Series of trucks.

Ford CEO Jim Farley on the company’s conference call said the F-Series remains the number one truck brand, out-selling its closest competitor by over 80,000 units in the first six months of the year. Ford is also gearing up to release all-new F-Series and Super Duty truck models.

Ford’s electric vehicle division, which the company has been right-sizing, generated $1 billion in revenue and an EBIT loss of $900 million, trending better than in 2025.

Baked into the company’s updated guidance is a seasonally adjusted annual selling rate of 16 million to 16.5 million units.

Furthermore, the impact of fires at Ford’s Novelis aluminum factory, which significantly hurt production, is now expected to be $1 billion less this year than in 2025.

Ford’s guidance, however, does not include the potential impact from further escalation in the Middle East or “a material downturn in the U.S. economy.”

In a research note following the earnings report, Citigroup analyst Mike Ward called the results “momentum shifting,” upgrading the stock to a buy rating and assigning a $20 price target.

“Accelerating production of the F-series, lower warranty accruals, an improved aluminum supply and moderating material costs are positive for the second half,” he wrote, according to Barrons.

All about the dividend

With a trailing dividend yield of 3.88%, Ford offers investors strong potential for passive income, so the stock is a buy on this front as long as the dividend remains sustainable.

This year, Ford is on track to pay out roughly $2.4 billion in dividends. The projected free cash flow of $6 billion to $7 billion should easily cover these payments.

Ford is also on track to generate adjusted earnings per share of $2.16, also easily enough to cover the projected $0.60 of annual dividends.

Considering the strength of the dividend and other tailwinds in the business, I do think investors can buy Ford stock.

It’s not necessarily going to be an artificial intelligence multi-bagger overnight, but it can generate solid passive income and solid long-term appreciation.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.