Why Ford's Recall Storm Isn't Derailing Its Investment Story

Quality issues and recalls have been an ongoing concern for U.S. legacy automaker Ford F. The company issued more than 150 recalls last year— the highest among major automakers— and the troubles continue this year too.

The latest recall involves about 604,533 vehicles in the United States due to a potential windshield wiper motor failure that could reduce visibility and increase the risk of crashes, according to the National Highway Traffic Safety Administration, as cited in Reuters. The recall affects certain 2020-2022 Explorer and Escape models, along with Lincoln Aviator and Lincoln Corsair vehicles.

Just a week earlier, Ford Motor Company had announced another major recall covering about 4.3 million pickup trucks and SUVs in the United States. The issue stems from a software error that could cause brake malfunctions and exterior lighting failures. The recall affects several popular models, including the F-150, F-250 Super Duty, Maverick and Expedition.

Frequent recalls do create direct financial costs, but more importantly, they can weigh on brand reputation and raise concerns about quality control. However, despite these challenges, the broader investment story for Ford remains intact. Several structural growth drivers continue to support the company’s long-term outlook.

Ford Pro Continues to Drive Earnings Growth

One of the biggest bright spots for Ford is its commercial and fleet business, Ford Pro. The segment has emerged as a major profit engine thanks to strong demand for work trucks, integrated software services and recurring service revenues. Order books for Super Duty trucks remain robust, reflecting healthy demand from commercial customers. More importantly, the segment is evolving beyond vehicle sales into a broader ecosystem that includes software tools, charging solutions and fleet management services.

Paid software subscriptions within Ford Pro increased 30% in 2025, highlighting the growing role of digital services in the company’s revenue mix. Profits from software and physical services are expected to grow about 6.5% this year. The company has also partnered with ServiceTitan to enhance digital capabilities for commercial customers.

Balanced Hybrid and EV Strategy

Another key pillar supporting the outlook for Ford is its balanced electrification strategy. While the electric vehicle market is seeing slower consumer adoption, Ford’s diversified product lineup and hybrids strength help reduce risk. The company continues to benefit from its strong presence in trucks and SUVs. Models such as the F-Series, Maverick pickup and popular utility vehicles provide a solid foundation for revenue and market share.

At the same time, Ford is investing in electrification with a focus on affordability and cost efficiency. The company is working on lower-priced electric vehicles built on a universal platform designed to improve profitability. This strategy targets segments where EV demand in the United States has remained relatively resilient.

Battery technology is another area of focus. Ford is moving ahead with lithium iron phosphate battery production in Michigan, while development of its next-generation EV platform in Kentucky remains on track.

Ford Energy Opens a New Growth Avenue

Beyond vehicles, Ford is also expanding into energy solutions through its Ford Energy initiative. The company plans to invest about $1.5 billion in this business in 2026 as it looks to build a presence in the fast-growing energy storage market.

The goal is to reach around 20 gigawatt-hours of battery storage capacity by 2027. The initiative leverages Ford’s existing expertise in battery manufacturing and its cost advantages in LFP technology.

Part of the strategy involves converting sections of the company’s Kentucky battery facility — built with partner SK On— and allocating capacity in Michigan for residential energy storage cells. By monetizing its battery assets beyond vehicles, Ford Energy could evolve into a higher-margin revenue stream over time.

Strong Liquidity and Attractive Dividend

Financial strength also supports the investment case for Ford. The company ended 2025 with roughly $50 billion in liquidity, including about $29 billion in cash. This sizable cash cushion provides flexibility to fund strategic initiatives under the Ford+ plan while navigating industry cycles. Management is also targeting another $1 billion in industrial cost improvements, which could further support profitability.

Income-focused investors may find the stock particularly appealing. Ford currently offers a dividend yield of more than 4%, significantly higher than the average yield of around 1% for the S&P 500. Such a payout can make the stock attractive for investors seeking steady income in uncertain market conditions.

Price Performance and Valuation

So far in 2026, shares of Ford have slipped about 2%. Even so, the stock has outperformed both the broader auto industry and key rivals like General Motors GM and Stellantis STLA.

YTD Price Performance Comparison

Valuation also remains appealing. Ford currently trades at a forward price-to-sales ratio of about 0.29, lower than the industry average. By comparison, General Motors trades at roughly 0.38 times forward sales, while Stellantis carries a lower multiple of around 0.12 due to ongoing operational challenges.

Encouragingly, earnings estimates for 2026 and 2027 signal year-over-year growth.

Last Word

Despite the ongoing recall headlines, the combination of strong commercial demand, a balanced electrification and hybrid strategy and expanding energy initiatives suggests that Ford’s long-term investment story remains intact.

Ford currently carries a Zacks Rank #2 (Buy). 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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