In Detroit, Ford Motor Company (F 0.45%) is the automaker that has everyone's attention. The mass market car company has been a symbol of American industrialism for a long time. Its shares had a fantastic showing in 2025, with the price rising 33% last year.
Across the Atlantic Ocean, in Maranello, Italy, there's a luxury auto manufacturer that's a favorite among racing enthusiasts. I'm talking about Ferrari (RACE 1.84%). Its stock has a stellar long-term performance, climbing 860% in the past 10 years (as of Feb. 24).
In the battle of Ford vs. Ferrari, which is the better investment opportunity right now?
Image source: Getty Images.
Ford shares are dirt cheap, an appealing setup for bargain hunters
Ford might be on the radar of the value investing community since the stock is trading in bargain territory. Investors can scoop up shares at a forward price-to-earnings ratio of 9. Those who bet on multiple expansion as part of their strategy will be intrigued.
A cheap valuation means the dividend yield of 4.23% is hefty. That's higher than the 4.04% yield on 10-year Treasuries. That can draw income investors.
Ford had an eventful 2025, as it dealt with the impacts of tariffs adding to its already massive expenses. That doesn't help boost the bottom line, which is already low. Ford's operating margin averaged just 3% in the past five years.
The business is also shifting gears with its Model e electric vehicle (EV) division. After reporting a huge $19.5 billion special charge in the fourth quarter, the focus now turns to hybrid models and lower-cost EVs.
There are some reasons to be optimistic. For one, Ford continues to sell the most popular vehicle lineup in America with its F-Series trucks. It's a leader in this segment of the market.
Ford's pro division is also finding success, registering a double-digit operating margin in 2025. "Pro continues to evolve its business by diversifying revenue streams and building out its high margin service infrastructure," CFO Sherry House said on the Q4 2025 earnings call.
NYSE: F
Key Data Points
Ferrari's impressive competitive position supports financial success
Ferrari operates with a completely different strategy. The primary objective is not to sell as many vehicles as possible. Instead, the company's goal is to produce and deliver less volume than the market wants. Consequently, this creates an element of scarcity, ensuring that demand always remains robust.
"Build one less car than the market demand," founder Enzo Ferrari is known to have said. That philosophy has led to remarkable success.
Investors can view Ferrari as a luxury brand more than a traditional car manufacturer. Pricing power is one reason why. Certain models can go for seven-figure sums, but they still register incredible demand with order books filling up years in advance. Consumers buy these machines not necessarily for their utility, but as a hobby, status symbol, or collector's item.
Financial performance also stands out in the auto industry. Ferrari's revenue trends aren't nearly as cyclical, as its target customer group includes the wealthiest swath of the population. Sales increased at a compound annual rate of 9.6% between 2015 and 2025, demonstrating durable gains. Wall Street expects the top line to increase at a yearly clip of 6.5% over the next three years.
The company's profitability also deserves some attention. Ferrari posted an impressive operating margin of 29.5% last year. This is a clear sign of a lucrative business model.
NYSE: RACE
Key Data Points
Running laps around the competition
Between Ford and Ferrari, the winner is clear. Ferrari is the better stock to buy.
In my view, Ford is cheap for a reason, due to its low growth and weak profits. And in the past decade, its shares have generated a total return of 86%. That comes up significantly short of the S&P 500 index, underperformance that I fully expect to continue over the next 10 years and beyond.
Ferrari's brand has stood the test of time. This intangible asset will keep driving steadily rising revenue and earnings far into the future. And with the stock trading 28% below its peak, now is a great time to invest.
