Is Ford Stock Overvalued or Undervalued?

January 5, 2022Updated: January 5, 2022

Ford Motor Company shares have outperformed the S&P 500 in the last year, generating a 12-month total return of 174.4 percent.

But after a huge run, investors may be wondering if there’s any value left in Ford stock.


A price-to-earnings ratio (PE) is one of the most basic fundamental metrics for gauging a stock’s value. The lower the PE, the higher the value. For comparison, the S&P 500’s PE is at about 30, nearly double its long-term average of 15.9.

Ford’s PE is 30.8, in-line with the S&P 500 average as a whole. Ford’s PE ratio is also up 213.4 percent over the last five years, suggesting the stock is priced at the high end of its historical valuation range.


Looking ahead to the next four quarters, the S&P 500’s forward PE ratio looks much more reasonable at just 21.3. Ford’s forward earnings multiple of 10.9 is roughly half the S&P 500’s, making Ford’s stock look undervalued.

Ford’s forward PE ratio is also about a third of its consumer discretionary sector peers, which are averaging a 31.1 forward earnings multiple.

Yet when it comes to evaluating a stock, earnings aren’t everything.

The growth rate is also critical for companies that are rapidly building their bottom lines. The price-to-earnings-to-growth ratio (PEG) is a good way to incorporate growth rates into the evaluation process. The S&P 500’s overall PEG is currently about 1.0; Ford’s PEG is 0.4, suggesting Ford is significantly undervalued after accounting for its growth.

Price-to-sales ratio is another important valuation metric, particularly for unprofitable companies and growth stocks. The S&P 500’s PS ratio is currently 3.27, well above its long-term average of 1.63. Ford’s PS ratio is a miniscule 0.64, less than a fifth of the S&P 500 average as a whole.

Finally, Wall Street analysts see no value in Ford stock over the next 12 months. The average analyst price target among the 19 analysts covering Ford is $20.50, suggesting 15.5 percent downside from current levels.


At its current price, Ford stock appears to be fairly valued based on a sampling of common fundamental valuation metrics.

By Wayne Duggan

© 2021 The Epoch Times. The Epoch Times does not provide investment advice. All rights reserved.

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