| Ford (NYSE: F) has carried the same reputation for years. The business is cyclical, it's capital-heavy, it sells inexpensive vehicles, it absorbs EV losses, and it carries pension baggage. Given all that, it's easy to see why most investors stopped paying attention a long time ago. But markets have a habit of clinging to old narratives even after the underlying reality has shifted. Ford isn't trying to reinvent itself. It's trying to run a durable business and fund its future without stress. That's not exciting. But it matters. The money still comes from familiar places. Ford Blue generates cash from trucks and hybrids, Ford Pro has quietly become a profit engine by layering software and services onto commercial fleets, and Ford Credit adds steady income in the background. This isn't a turnaround story. It's a company that's still operating and doing what it's supposed to do. The latest quarter reinforced that point. Revenue reached a record $50.5 billion. Adjusted free cash flow totaled $4.3 billion for the quarter and $5.7 billion year to date, and operating cash flow was even stronger. No tricks. Just cash. Yes, the company's EV losses are real. Tariffs didn't help, and neither did the recent fires at a major aluminum plant, which disrupted F-150 production. But Ford still finished the quarter with roughly $33 billion in cash and reiterated full-year free cash flow guidance of $2 billion to $3 billion. That's not a balance sheet under pressure. That's a company absorbing noise and moving on. Now let's look at how the market prices that reality. Ford trades at an enterprise value of just 0.91 times its net asset value (NAV). The average comparable company trades north of four times its NAV. In effect, investors are saying Ford's assets aren't worth much. That's hard to reconcile with the cash. Ford generates quarterly free cash flow equal to 4.36% of its net assets. The peer average barely clears 1%. Ford is pulling significantly more cash out of each dollar of assets while trading at a deep discount. That's the disconnect. Cash flow hasn't been perfectly smooth, but it has been persistent. Over the past 12 quarters, Ford has grown its free cash flow more steadily than the broader universe. Even while funding EV investments, the core business continues to pay for itself. The stock has moved higher over the past year, climbing from below $9 to above $13. Sentiment has improved, but valuation hasn't. Ford is still priced as if decline is inevitable. That may be true someday... but I'm not convinced that's the case today. | 
Post a Comment
Post a Comment