What's Fueling Ford's Free Cash Flow Growth Outlook for 2026?

Ford Motor Company F generated $3.5 billion in free cash flow and ended 2025 with nearly $29 billion in cash and close to $50 billion in total liquidity. The legacy automaker continues to prioritize maintaining a strong balance sheet, which provides flexibility to invest in growth opportunities, such as Ford Energy, as well as software and physical services. These are high-margin and high-growth domains for Ford.

For 2026, Ford expects adjusted free cash flow to be between $5 billion and $6 billion, which is roughly higher by $2 billion from 2025. This increase is expected to come from a rise in automotive profits supported by strong Ford Blue EBIT and about $1 billion in anticipated tariff-related payments from the U.S. government.

For the Ford Blue segment, the company expects EBIT to range between $4 billion and $4.5 billion compared with $3.02 billion in 2025. The projected increase is expected to be driven by improvements in the underlying business as the segment recovers from the impact of the Novelis fire, along with a more favorable product mix as the company focuses on its key revenue and profit pillars. Continued progress in cost reductions is also anticipated to drive growth. In 2025, Ford delivered $1.5 billion in total cost reductions and expects $1 billion of industrial cost improvements in 2026. F carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cash Flow Outlook of Ford’s Peers

Tesla, Inc. TSLA plans to spend around $20 billion in capital expenditures this year as it pivots deeper into artificial intelligence, autonomous driving and robotics. This marks a sharp jump from Tesla’s capex of roughly $8.5 billion last year and exceeds the prior peak of $11.3 billion in 2024. While high capital expenditures will create long-term opportunities for Tesla, it will pressure its near-term cash flows.

Rivian Automotive, Inc.’s RIVN cash balance declined to $3.5 billion at the end of 2025 from $5.3 billion in 2024, as the company continues to burn cash while pursuing long-term growth. Additionally, Rivian forecasts capex in the band of $1.95-$2.05 billion (up from $1.7 billion spent in 2025), primarily to complete R2 construction and tooling, begin vertical construction at its new Georgia plant, and expand its sales, service and charging network. While these efforts bode well for long-term prospects, they are likely to strain Rivian’s near-term cash flows.

F’s Price Performance, Valuation and Estimates  

Ford has underperformed the Zacks Automotive-Domestic industry in the last six months. Its shares have gained 6.4% compared with the industry’s growth of 22.4%. 

 
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.28, lower than the industry’s 3.29. 

 
The Zacks Consensus Estimate for F’s 2026 and 2027 EPS has moved down a penny in the past 30 days. The Zacks Consensus Estimate for F’s 2027 EPS has moved up 4 cents in the past seven days. 

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

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