Ford Motor CompanyFNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

⚠️Model Warnings

•Terminal value represents 87% of enterprise value. Valuation highly sensitive to long-term assumptions.

DCF Valuation Summary

Strong Buy

Fair Value: $56.50 per share(market-calibrated)

+322.0%

Upside to Fair Value

Current

$13.39

Pure Model

$68.45

Fair Value

$56.50

Bull Case

$84.25

Bear Case

$57.16

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

0.50%

Calibrated Growth

2.13%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $68.45.

What's Driving This Ratingfor F

↓

CapEx normalizing toward maintenance

Historical CapEx is 4.15% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$351M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 4.43% — below the sector mature average of 12.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $22.8B (9.52% margin).

→

Moderate revenue growth

Analyst consensus projects -0.21% revenue growth, fading to 3.00% by Year 10. Revenue reaches $239.1B (vs $187.3B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 250bps below the model's 3.00%. This suggests the market sees headwinds or risks not in the model.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 47.73% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.67

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)12.00%

Cost of Debt

Pre-tax Cost of Debt0.81%

Tax Rate21.00%

After-tax Cost of Debt0.64%

Equity Weight (E/V)24.12%

Debt Weight (D/V)75.88%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (24.12% × 12.00%) + (75.88% × 0.64%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$186.9B	$197.7B	$202.8B	$217.7B	$239.1B
EBIT	$8.3B	$8.8B	$9.0B	$15.6B	$22.8B
Tax	$1.7B	$1.8B	$1.9B	$3.3B	$4.8B
NOPAT	$6.5B	$6.9B	$7.1B	$12.3B	$18.0B
+ Depreciation	$6.5B	$6.9B	$7.1B	$7.6B	$8.3B
- Capex	$7.7B	$8.1B	$8.3B	$8.8B	$9.6B
- Δ NWC	-$110M	$1.9B	$2.1B	$2.0B	$1.9B
Free Cash Flow	$5.4B	$3.7B	$3.8B	$9.1B	$14.8B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$5.1B	$3.2B	$2.9B	$6.2B	$8.7B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$14.8B

Terminal Growth Rate3.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$611.7B

PV of Terminal Value$358.1B

Exit Multiple Method

Year 10 EBITDA$31.1B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$622.1B

PV of Terminal Value$364.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$55.4B

PV of Terminal Value$358.1B

Enterprise Value$413.5B

(-) Net Debt$144.2B

Equity Value$269.3B

Shares Outstanding4.0B

Price per Share$67.69

Exit Multiple Method

PV of Projected FCFs$55.4B

PV of Terminal Value$364.2B

Enterprise Value$419.6B

(-) Net Debt$144.2B

Equity Value$275.4B

Shares Outstanding4.0B

Price per Share$69.22

Pure Model Fair Value

$68.45

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
3.50%	$96.10	$90.46	$85.09	$79.97	$75.10
4.50%	$77.91	$90.46	$85.09	$79.97	$75.10
5.50%	$55.28	$60.77	$68.45	$79.97	$75.10
6.50%	$41.06	$44.00	$47.78	$52.82	$59.88
7.50%	$30.87	$32.64	$34.80	$37.51	$40.98

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$57.16

326.9% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 2.08

Base Case

$68.45

411.2% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.67

Bull Case

$84.25

529.2% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.42

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Cyclical Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.21%

Year 3 Revenue Growth3.72%

Year 5 Revenue Growth3.87%

Year 7 Revenue Growth3.52%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin4.43%

Terminal EBIT Margin12.00%

Tax Rate21.00%

Historical Capex / Rev4.15%

Terminal Capex / Rev4.00%

NWC / Revenue27.48%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Cyclical sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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