Ford Motor Company F is focusing on software and services as it works toward its long-term profitability goals. The company expects its software and physical services business, currently generating around $15 billion in revenues, to grow at nearly 8% annually through the end of the decade, per the company’s first-quarter 2026 transcript.
A major driver of this growth is Ford’s expanding aftersales and parts business. The company is increasing its focus on Ford Pro customers while also broadening its parts catalog to include multimake components for third-party repair shops across the United States. Dealers are investing heavily in service capacity, helping Ford strengthen its wholesale parts operations and improve customer reach.
Another key opportunity is remote vehicle servicing. Nearly 20% of Ford’s repairs are now completed outside dealerships, directly at customer locations. This is especially attractive for commercial fleet operators, as it minimizes downtime and improves convenience. Ford also sees strong momentum in Pro Intelligence services, which are reportedly growing 30% to 40% per quarter with high margins.
The company’s parts business carries a different revenue risk profile compared to its vehicle business. It operates more like an annuity and tends to be countercyclical in nature. In periods when vehicle sales decline, customers are more likely to repair their existing vehicles instead. As a result, the capabilities being developed on the parts side are expected to strengthen the company’s position during downturns.
F carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
F’s Price Performance, Valuation and Estimates
Ford has underperformed the Zacks Automotive-Domestic industry and its peer, General Motors Company GM, while it has outperformed Tesla, Inc. TSLA in the last six months. Its shares have lost 7.4% compared with the industry’s decline of 1.5%. Tesla has lost 7.5%, while General Motors has returned 10.4% in the same period.
Image Source: Zacks Investment Research
From a valuation perspective, F appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.28, lower than the industry’s 3.51. Tesla is trading at a forward sales multiple of 14.71, while General Motors is trading at 0.38.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Ford’s 2026 and 2027 EPS has moved up 5 cents and down 2 cents, respectively, in the past seven days.
Image Source: Zacks Investment Research
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Ford Motor Company (F) : Free Stock Analysis Report
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Tesla, Inc. (TSLA) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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