Ford Stock Analysis: Is Ford A Profitable Company In 2022?

Key takeaways

• Ford has shifted to focusing on electric vehicles, and investors like what they are hearing.
• The financials are strong, aside from losing money in the start-up Rivian.
• Ford’s outlook is bright as long as investors can remain patient over the short term.

Ford stock was on a big upswing in 2021, rising 136% as investors cheered the automaker's plans for new EV vehicles. In 2022, Ford stock has performed far worse, down 44%. Part of this is due to the rise in 2021, and another factor is the weak stock market in light of global economic conditions. Nevertheless, Ford is positioning itself for the future. Here is where Ford stands today and its plans to remain profitable in the years to come.

Ford's shifting priorities

Ford has been making vehicles to meet consumers' needs since its inception almost 120 years ago. The manufacturer has been known for producing economical vehicles for the average consumer, apart from the occasional stand-out like the Mustang.

It returned the Bronco and Maverick nameplates to its lineup and found consumers were eagerly lining up to get their hands on these vehicles. They were even willing to wait for their orders during ongoing manufacturing delays. However, Ford's entry into the EV market has caused its star to rise again; it has also forced some tough decisions to close unprofitable operations around the globe.

Ford, along with the other major American auto manufacturers, watched the meteoric rise of Tesla's all-electric vehicle that transformed how consumers viewed their transportation and its impact on the environment. However, consumers wanted to buy EVs built by their favorite manufacturers and drive familiar vehicles. Ford's successful introduction of the F-150 Lightning demonstrates the pent-up consumer demand for an EV pickup truck that can perform as well as its traditional gas-powered counterpart. It also shows the ability of Ford to understand their consumers’ desires for a conventional vehicle design combined with cutting-edge technology.

Another cost-cutting move that demonstrates Ford’s shifting priorities is closing two assembly plants and an engine factory in Brazil. This action took place in 2019, but it heralded the beginning of a restructuring strategy to end the production of sedans and leave the Brazilian market. Ford's Brazilian production cost the company over $11 billion over the last decade before they ceased operations in the country. The decision to close these plants means Ford no longer has to prop up its unprofitable divisions, allowing the company to divert money to more profitable ventures such as EVs.

Ford’s consolidated income statement review

On June 30, 2022, Ford Automotive reported revenues of $37.90 billion for the second quarter of the 2022 fiscal year and a total of $70.20 billion for the first half of the fiscal year 2022. This represents an increase from $24.12 billion and $57.68 billion respectively in the same quarter in the 2021 fiscal year.

The Ford Credit division reported lower earnings at $2.56 billion for the second quarter of the fiscal year 2022, compared with $2.60 billion for the second quarter of the 2021 fiscal year. Its mobility division saw an increase to $25 million during the current quarter, up from $21 million in the same quarter of the fiscal year 2021.

Ford's revenues totaled $74.66 billion at the end of the second quarter of the fiscal year 2022, but the company suffered a net loss of $2.44 billion and a comprehensive loss of $512 million for the second quarter of the 2022 fiscal year. For the first half of the 2022 fiscal year, Ford had a comprehensive loss of $3.57 million after costs and expenses were factored in. Most of the loss can be attributed to the loss in value of Rivian, a car manufacturer in which Ford has a 12% stake.

Ford balance sheet review

At the end of the second quarter of the fiscal year 2022, Ford reported cash and cash equivalents of $19.51 billion, slightly decreasing from $20.54 billion from the same period a year ago. It also reported $30.71 billion in finance receivables, slightly down from $32.54 billion in the second quarter of the 2021 fiscal year. Ford's total liabilities and equity at the end of the second quarter of the 2022 fiscal year were $245.75 billion, down from $257.03 at the end of the same period last year.

Outlook for Ford stock

Ford is looking at the future of transportation and taking steps to retool its production of vehicles to stay relevant. Consumer demand for its EVs, especially the Ford F-150 Lightning, is strong and doesn't look to be easing up any time soon. Automotive industry analysts predict a slump in sales for 2023 due to a production glut as supply chain shortages and chip production stresses ease. This can lead to a temporary depression in Ford's stock price, even with the demand for the production of its EVs.

Currently, EV production is a small part of Ford's overall output. Gas-powered vehicles still drive Ford's profitability as EVs are still not practical for most consumers. The initial demand for EVs may dry up due to a lack of consumers who can charge an EV at home.

Federal and state governments have yet to develop much in the way of plans to improve car-charging infrastructure — something that's vital to the mass adoption of EVs. Ford needs to balance its manufacture of gas-powered vehicles with EVs to meet consumer’s needs; it remains to be seen if Ford is conscious of these issues.

Over the past year Ford's stock price has been on a steady decline, investors aren't flocking to buy its stock, but the company is showing that it can pivot toward the future and provide the auto-buying public such highly desirable vehicles.

The bottom line

When it comes to the production and selling of vehicles, Ford is a profitable company. Their investment in the start-up Rivian skews their bottom line to a net loss during the current fiscal year. If investors can remain patient, Ford has a lot of positives going for it. Current CEO Jim Farley continues to end operations where the company is losing revenue and put that money to work where there is profit. Additionally, as Rivian works through its growing pains, Ford's investment in this EV manufacturer could pay off nicely in the coming years.

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