Ford Motor Company F emphasized cost discipline, product transformation and diversification during its third-quarter 2026 earnings call, while raising the lower end of its annual profit outlook despite mounting commodity pressures.
Management outlined plans to stabilize profitability in 2027 while investing in affordable electric vehicles, battery storage and higher-margin services. Executives also addressed launch risks, competitive pressures and the timeline for improving EV profitability.
F Raises 2026 Outlook Amid Rising Costs
Ford raised its 2026 adjusted EBIT guidance to $10.5-$11 billion from $10-$11 billion. The adjusted free cash flow guidance is at $6-$7 billion.
CFO Sherry House said that the outlook incorporates commodity headwinds approaching $2.5 billion, approximately $500 million higher than previously expected. Management maintained its $1-billion material and warranty cost reduction target.
The company reported adjusted earnings of 49 cents per share, beating the Zacks Consensus Estimate of 39 cents. Automotive revenues of $46.08 billion surpassed the consensus estimate of $45.67 billion, while consolidated revenues declined 2% to $49.5 billion.
Ford Motor Company Price, Consensus and EPS Surprise
Ford Motor Company price-consensus-eps-surprise-chart | Ford Motor Company Quote
Ford Targets Stable 2027 Profits Despite Inflation
CEO Jim Farley said that Ford is targeting 2027 profitability roughly in line with 2026 while pursuing an 8% adjusted EBIT margin by 2029.
Management expects $2 billion in additional commodity, memory and logistics cost pressures next year. Ford plans to offset these through operating efficiencies, revenue optimization and improved manufacturing productivity.
During JPMorgan's questioning, House emphasized that inventory management, product mix and structural savings remain within management's control. She highlighted artificial intelligence tools that align demand forecasting with production planning.
F Details Affordable EV Launch & Profitability Timeline
Ford's Universal Electric Vehicle platform remains central to its EV turnaround. Farley confirmed that the Fathom, an affordable electric vehicle starting at $28,350, remains scheduled for launch in the fourth quarter of 2027.
Responding to JPMorgan, COO Kumar Galhotra said that 90% of validation testing was complete, with 5,000 unicastings produced. Supplier readiness and production-quality consistency remain important launch priorities.
House told Wolfe Research that Model e profitability improvements will not follow a linear trajectory. Higher investment expenses are expected in 2027, with more substantial improvement beginning in the first half of 2028 as new vehicles and energy operations ramp up. Ford continues targeting Model e breakeven by 2029.
Ford Energy Gains Traction in Battery Storage
Ford Energy represents another pillar of management's diversification strategy. Farley said that the business remains on schedule to establish 20 gigawatt-hours of annual battery capacity by the end of 2027.
Executed contracts and late-stage customer negotiations collectively cover more than 80% of planned 2028 capacity. Management expects that capacity to be fully committed by the first quarter of 2027.
During Morgan Stanley's questioning, Ford Energy’s president David Carroll clarified that these commitments should not be interpreted as confirmed backlog. He said that formal backlog disclosures would begin next year.
F Expands Services as Commercial Margins Face Pressure
Ford Pro generated $1.7 billion in quarterly EBIT, declining 16%, as higher commodity expenses and temporary Oakville production-launch costs pressured profitability.
House said that favorable commercial demand and pricing support the business's outlook. Ford Pro expects $7 billion in full-year EBIT, while expanded Super Duty capacity creates commercial sales opportunities.
Farley emphasized software, services and parts as increasingly important earnings contributors. House said that these businesses represented approximately 10% of quarterly revenues at attractive margins. BlueCruise, connectivity services and Ford Pro Intelligence supported software growth, while parts benefited from wholesale expansion.
Ford Maintains Focus on Execution & Capital Efficiency
Management's overall message centered on balancing near-term profitability with substantial investment in new products and manufacturing capabilities.
Farley emphasized that cost competitiveness, operational reliability and disciplined capital allocation remain essential to achieving Ford's 2029 margin objective. Management also acknowledged continued exposure to inflation, geopolitical uncertainty and global competition.
What F's Zacks Rank & Style Scores Indicate
Ford currently carries a Zacks Rank #4 (Sell), indicating an unfavorable near-term earnings estimate revision outlook. Its Value Score of A, Growth Score of C and Momentum Score of B reflect stronger valuation and momentum characteristics than growth characteristics.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The stock also has a VGM Score of A, reflecting favorable combined value, growth and momentum characteristics. However, Zacks' framework prioritizes the Rank over Style Scores, making the current combination less favorable despite its strong composite score. The Zacks Rank can change as analysts revise earnings estimates following the latest quarterly results.
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