Can Ford Navigate Policy Risks and Protect Europe's Margins?

The core of Ford Motor Company’s F European operations continues to be anchored in its Pro strategy, which remains a strong source of profitability, per the company’s fourth-quarter 2025 earnings transcript. The company is now beginning to see tangible benefits from scale collaboration with Volkswagen Group, particularly in the one-ton van segment, where shared scale is delivering meaningful financial value.

At the same time, growing concerns around the shrinking profit pool for passenger cars in Europe are becoming central to the strategic conversation. In response, the company has been actively working to improve profitability in its passenger car business for several years. Ford is increasingly leveraging platforms from Renault Group, especially its B-segment EV architecture, to significantly lower costs and enhance the economics of its electric vehicle lineup in Europe. 

Looking ahead, the company plans to expand its passenger car presence in Europe selectively, focusing only on segments where it holds competitive strengths. The aim is not only to build a sustainable and profitable passenger car business but also to ensure dealer profitability, enabling further investment into the Pro ecosystem.

A major uncertainty, however, lies in how policymakers in the European Union and the United Kingdom balance emissions reduction goals with employment considerations. As a global automaker rather than a national champion, Ford has taken a vocal stance on the need to strike the right balance between CO2 targets, customer realities and job risks. Ultimately, the future profitability of Europe’s passenger car market is expected to be heavily influenced by regulatory decisions made by governments in these regions. F sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

F’s Price Performance, Valuation and Estimates  

Ford has underperformed the Zacks Automotive-Domestic industry and General Motors Company GM in the last six months, while it outperformed Tesla TSLA. Its shares have gained 21.2% compared with the industry’s growth of 26.1%. General Motors gained 40.3%, whereas Tesla rose 19.4% during the same period.

 
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.33, lower than the industry’s 3.42. General Motors and Tesla are trading at forward sales multiples of 0.4 and 14.99, respectively.
 

The Zacks Consensus Estimate for Ford’s 2026 EPS has moved down a penny in the past 30 days. The Zacks Consensus Estimate for F’s 2027 EPS has moved down a penny in the past seven days. 

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

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