Ford (F 0.56%) shares have done very well this year, climbing 20% (as of Oct. 17). This gain surpasses the S&P 500's YTD return. The solid performance has happened even though the company has dealt with some big issues in 2025. For instance, Ford is handling the negative effects of tariffs, and it just can't seem to get past all the recalls.
Nonetheless, Ford is an American icon. Could buying this auto stock today set you up for life?
Image source: Getty Images.
Ford is showing promise in certain areas
Ford stock's upward trend likely comes from the fact that the market is still optimistic in the face of the challenges mentioned. There are some positive factors.
Ford's Pro division is doing well. In the second quarter of 2025, revenue rose by 11% year over year. Profits are solid, with an operating margin of 12.3%, much better than the business overall.
Ford Pro adds a high-margin and recurring revenue stream for the company. Besides selling commercial vehicles, the division also offers software and services.
Investors might be skeptical of the growth potential in the electric vehicle (EV) market. Affordability has been a problem, pressuring demand. So, Ford is investing $5 billion to bolster manufacturing capabilities and introduce a cheaper pickup truck.
The industry is still shifting, and it's looking like there will be more EVs on the road years down the line. For what it's worth, Ford is better positioned for the transition thanks to its popular hybrid lineup that can provide a hedge based on what consumers want.
Don't forget that the business is still a dominant force when it comes to gas-powered pickup trucks. The F-Series lineup is on pace to be America's best-selling truck for 49 straight years.
Investors will find no shortage of reasons to be critical of the business
Investors can generate robust returns by buying and holding shares in outstanding businesses. The first step in doing this is to identify which companies fit the description. Despite the previously mentioned positive traits, there are very compelling reasons that point to Ford being a subpar business.
It might not necessarily be Ford's fault. However, the car manufacturing industry is not attractive from an investment perspective. One important reason is the lack of outsized growth potential. Between 2014 and 2024, Ford's automotive revenue increased by just 27%. Even with changes coming from the rise of EVs, the number of passenger vehicles sold globally doesn't grow by much over the long term.
Ford's disappointing profitability is also discouraging for investors. In the past decade, the operating margin has averaged just 1.8%. The company hasn't shown the ability to benefit from economies of scale and achieve a cost advantage. This might also indicate that Ford doesn't have an economic moat that supports its competitive position.
Those low profits add risk because Ford's demand can be cyclical. If the economy takes a turn for the worse, households will delay new car purchases. As a result, Ford could start posting net losses temporarily.
NYSE: F
Key Data Points
Can Ford stock generate huge long-term returns?
Ford has a disappointing track record that might indicate how it will do going forward. In the past decade, shares have produced a total return of 35%. This doesn't give investors a reason to be confident.
The stock might be compelling because it trades at a cheap forward price-to-earnings ratio of 9. Should the business start to report improving financial performance, maybe the multiple could rerate higher. Investors might also like the high dividend yield of 5.03%.
I believe the negative factors far outweigh any positive attributes here. Ford is not a stock that will set you up for life.
