Ford's Q2 Results Show Promise Amid Shift to Ford Pro Division

Ford's Q2 results and strategic shift to divert funds from its unprofitable EV unit to the cash cow Ford Pro division have reassessed investors, leading to a clawback of recent losses. The company is focusing on high-margin and reoccurring revenue streams.

Title: Ford's Q2 Results: Focus on High-Margin Divisions and Tariff Challenges

Ford Motor Company (F) reported better-than-expected results for the second quarter of 2025, with automotive revenues rising nearly 5% to $46.9 billion, surpassing the Zacks Consensus Estimate of $41.7 billion. EPS came in at 37 cents, outperforming the consensus mark of 34 cents [1].

Despite these positive numbers, Ford flagged an increase in its expected tariff impact for the year. The company incurred $800 million in tariff-related costs in the second quarter alone and now expects a net $2 billion tariff hit for full-year 2025, up from the previously projected $1.5 billion. 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 [1].

The company's key segments showed varied performance. Ford Blue, which generated $25.8 billion in revenues, saw a 3% year-over-year decline. Model e, the electric vehicle division, recorded a revenue increase of 105% to $2.4 billion but had a negative EBIT of $1.3 billion. Ford Pro, the commercial division, saw revenues total $18.8 billion, up 11% year-over-year, with EBIT at $2.3 billion. Ford Credit generated $3.2 billion in revenues, up roughly 1% year-over-year, with EBIT of $645 million [1].

Ford's strategic shift to divert funds from its unprofitable EV unit to the cash cow Ford Pro division has reassessed investors, leading to a clawback of recent losses. The company is focusing on high-margin and recurring revenue streams. Ford CEO Jim Farley voiced concerns about the recent trade agreements and the potential escalation of tariffs on vehicles imported from Canada and Mexico, which could further impact the company's financial performance [1].

Ford's price performance has been relatively robust. Shares have risen roughly 10% year-to-date against the industry's decline of 18%. Comparatively, General Motors (GM) and Stellantis (STLA) shares have declined 2% and 31%, respectively, over the same timeframe [1].

From a valuation perspective, Ford is trading relatively cheap. It 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, and General Motors' P/S sits at 0.28 [1].

The Zacks Consensus Estimate for 2025 EPS implies a decline of 38% on a year-over-year basis, while estimates for 2026 point to growth of 12.7% from the 2025 projected level [1].

Investors may choose to hold the stock, given Ford's strong financial footing and commitment to rewarding shareholders. The company will pay a 15 cent/share dividend on September 2 to shareholders of record as of August 11. However, near-term headwinds persist, including the ongoing tariff uncertainty and rising recall costs. Ford carries a Zacks Rank #3 (Hold) [1].

References:
[1] https://www.nasdaq.com/articles/fords-q2-beat-overshadowed-tariff-pain-whats-your-move-now
[2] https://www.electrive.com/2025/07/31/ford-model-e-losses-widen-despite-doubling-revenue-in-q2-2025/