Ford's Q2 Beat Overshadowed by Tariff Pain: What's Your Move Now?

U.S. legacy automaker Ford F posted better-than-expected results for the second quarter of 2025. Automotive revenues rose nearly 5% to $46.9 billion, beating the Zacks Consensus Estimate of $41.7 billion. EPS came in at 37 cents, topping the consensus mark of 34 cents.

Ford Motor Company Price and EPS Surprise

Ford Motor Company price-eps-surprise | Ford Motor Company Quote

That said, the company flagged an increase in its expected tariff impact for the year. In the second quarter alone, Ford incurred $800 million in tariff-related costs. It now expects a net $2 billion tariff hit for full-year 2025, up from the $1.5 billion projected previously. Initially, Ford had guided a $2.5 billion gross tariff impact, with plans to offset $1 billion through mitigation efforts. Now, it has raised its gross tariff cost forecast to $3 billion but still expects to offset $1 billion.

Other auto giants also sounded the alarm on tariffs. Ford’s closest peer General Motors GM said second-quarter profits were dented by $1.1 billion in tariff costs. It expects a $4-$5 billion full-year impact. Italian-American automaker Stellantis STLA reported a $350 million tariff drag in the second quarter, with 2025 costs estimated at $1.73 billion.

Ford appears better positioned than General Motors when it comes to tariffs due to its larger U.S. manufacturing base and lower vehicle imports. Still, Ford CEO Jim Farley voiced concerns when asked about the recent trade agreements between the United States and other countries, noting that vehicles imported from Canada and Mexico — with significant U.S. content — are still subject to steep 25% tariffs. With Trump threatening to hike those tariffs further if no deal is reached by tomorrow, tensions could escalate.

So, what now for Ford stockholders? With higher-than-expected second-quarter earnings but rising tariff pressure, should they hold, buy more, or look elsewhere? Before discussing that, let’s take a look at Ford’s key quarterly numbers and updated outlook.

How Ford’s Key Segments Performed in Q2

Ford Blue: It generated $25.8 billion in revenues (down 3% YoY) and $661 million in EBIT (significantly down from $1.67 billion in the year-ago period)

Model e: It recorded $2.4 billion in revenues (up 105% YoY) and a negative $1.3 billion in EBIT (wider than $1.15 billion loss in the corresponding quarter of 2024)

Ford Pro: Revenues totaled $18.8 billion (up 11% YoY) and EBIT was $2.3 billion (down from $2.5 billion in the prior-year quarter)

Ford Credit: It generated $3.2 billion in revenues (up roughly 1% YoY) and $645 million in EBT (up 88% YoY)

Ford Reinstates 2025 Outlook

The automaker had suspended its full-year guidance in May due to President Donald Trump’s tariffs. However, it has now issued an updated guidance, projecting full-year adjusted EBIT in the band of $6.5-$7.5 billion. The updated guidance factors in the estimated $2 billion impact from tariffs. Before withdrawing guidance in February, Ford had forecast adjusted EBIT between $7 billion and $8.5 billion. The company now expects full-year adjusted free cash flow in the range of $3.5 billion to $4.5 billion, with capital expenditures projected at around $9 billion.

Ford’s Price Performance, Valuation & Estimates

Shares of Ford have risen roughly 10% year to date against the industry’s decline of 18%. Comparatively, General Motors and Stellantis shares have declined 2% and 31%, respectively, over the same timeframe.

YTD Price Performance Comparison

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From a valuation perspective, Ford is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.27, below the industry’s 2.7. Meanwhile, Stellantis trades at a forward sales multiple of 0.15, whereas General Motors’ P/S sits at 0.28.

The Zacks Consensus Estimate for 2025 EPS implies a decline of 38% on a year-over-year basis. For 2026, the estimates point to growth of 12.7% from the 2025 projected level.

Is F Stock Worth Buying Now?

Ford continues to be a solid player in the U.S. auto market, backed by a product lineup that resonates well with American consumers. Its hybrid sales are gaining traction, particularly as fully electric vehicle (EV) adoption faces headwinds. One of Ford’s bright spots remains its commercial division, Ford Pro, which is driving growth thanks to robust demand for Super Duty trucks and increasing interest in its software, fleet management and service offerings.

The company is also on a strong financial footing. At the end of the second quarter of 2025, Ford had $46.6 billion in total liquidity, including $28.4 billion in cash. Despite ongoing tariff uncertainty, Ford remains committed to rewarding shareholders. It will pay a 15 cent/share dividend on Sept. 2 to shareholders of record as of Aug. 11.

However, there are notable concerns besides tariff fears. Ford’s EV business continues to operate at a loss, and rising recall costs are putting added pressure on margins. Recall costs are just adding to the woes. In the second quarter, the company recorded a $570 million charge tied to a major SUV recall due to fire risks. Notably, Ford has been leading the auto industry in recalls so far in 2025. While Q2 adjusted EBIT absorbed an $800 million hit from tariffs, Ford’s $36 million net loss was largely due to special charges related to recalls and the cancellation of an unprofitable EV model.

All in all, Ford’s long-term fundamentals remain intact, but near-term headwinds persist. Existing investors may choose to hold the stock, while new investors might stay on the sidelines for now.

Ford carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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