Three months ago Ford delivered its most confident quarter in a long while, lifting its full-year adjusted EBIT outlook for the third straight time. The stock has since gone the other way. Shares have fallen nearly 22% since that report while the S&P 500 gained close to 4%, which leaves a gap of roughly 25 percentage points between what management is saying and what the market is willing to believe. The third-quarter report, due after the close on October 28, is where that gap gets tested.
The Street is bracing for a softer quarter on paper. Consensus calls for earnings of $0.39 a share on revenue of $46.5 billion, which would be declines of about 13% and 8% from the year-ago $0.45 and $50.53 billion. It would also mark a sequential step down from the $0.42 Ford earned last quarter on $48.3 billion in sales. The Earnings Whisper sits a bit lower at $0.36, a hint that the informed crowd expects something slightly short of consensus rather than a comfortable beat. That is a modest bar, but this is a quarter about contraction, not growth.
The reason the decline does not alarm management is the shape of the year. Ford now guides to $10 billion to $11 billion in adjusted EBIT and $6 billion to $7 billion in free cash flow, up from $8 billion to $10 billion in EBIT when the year began. Executives said commodity costs of just over $2 billion would land mostly in the second half, with roughly $1.5 billion falling after midyear. A weaker third quarter is therefore partly baked in. The real question is whether the quarter keeps Ford on pace for the guided range, and whether management reaffirms or even nudges that range again. Anything that hints the raise was front-loaded optimism would hurt, given how quickly the stock has already discounted the good news.
The drivers of last quarter's upgrade deserve close scrutiny. Ford Blue's EBIT jumped 72% year over year on richer mix and firmer pricing, and management lifted its U.S. pricing assumption to a half-point gain from flat. Off-road and passion vehicles reached a quarter of U.S. sales, and quality gains were expected to trim warranty and material costs by about $1 billion this year. Holding those margins as commodity pressure builds would validate the narrative. Ford Pro is the weaker link: its EBIT fell 26% last quarter amid the Novellus aluminum disruption, and its outlook was narrowed to $7 billion to $7.5 billion without a higher top end. Signs that aluminum supply is normalizing, along with progress toward the fourth-quarter Oakville Super Duty launch, which adds 100,000 units of capacity, would go a long way toward restoring confidence in the commercial franchise. Inventory, which sat slightly below target, also bears watching for any sign of pricing discipline slipping.
The newer stories matter too. Model E losses improved for a third straight quarter, paid software subscriptions grew about 50% to roughly 1.6 million, and Ford Energy moved from concept to signed contracts, with management describing itself as well along in selling out 2028 capacity. Concrete updates on customer commitments would help make the case that these adjacencies are more than slideware.
Sentiment has cooled, slipping to 20.2% bullish from 30.7% before the last report, and the chart reflects the mood. At $12.18, the stock trades below its 200-day moving average of $13.43 and sits just above its post-earnings low of $11.88. That positioning cuts both ways: expectations are subdued, but support is close at hand if the news disappoints. Management also declined to promise higher EBIT in 2027, citing the non-repeat of a $1.3 billion benefit and full-year commodity drag, and any sharper caution there could overshadow the quarter itself. Ultimately, the report comes down to one question: can Ford absorb its heaviest commodity hit of the year and still credibly defend a $10 billion to $11 billion EBIT outlook? If it can, the stock's slide looks overdone. If not, the market's skepticism will look justified.