Skip to Content
Stock Analyst Update

Ford CEO Change Doesn't Affect Fair Value Estimate

We are leaving our fair value in place due to Ford’s high debt load, and we want to see Farley produce meaningful improvement.


Ford (F) announced on Aug. 4 that CEO and President Jim Hackett, 65, will retire on Oct. 1 and be succeeded by Jim Farley, 58. Farley is currently COO, and it is not a surprise that he is succeeding Hackett, as that seemed obvious once he became COO in February. We have said in our report that we expected Hackett to retire by the end of 2021, and we’ve heard frustration on earnings calls with Hackett’s vision and communication.

Ford’s stock was just under $11 when Hackett took over in May 2017, so we think the move may lead to share price appreciation in the short term. For now, we are leaving our fair value in place due to Ford’s high debt load, and we want to see Farley produce meaningful improvement, which may take until next year due to launches of the new-generation F-150 late this year and three Broncos coming in 2020-21. Hackett will be a special advisor through March 2021 and Farley joins the board in October. Farley receives a 21% salary increase to $1.7 million and a $4 million stock option grant, but we feel he also has high intrinsic motivation to see Ford succeed because of his bond with his grandfather, an early Ford employee.

We look forward to seeing what Farley brings as a CEO, and we expect a more direct communication style than Hackett’s. Farley is a passionate car person and brings a lifetime of auto experience both from Ford in the U.S., Europe, South America, and Lincoln (he led the latter three at one point) since he joined in 2007, but also from a long Toyota career, including time at Lexus and the launch of the Scion brand. He has extensive marketing and executive leadership experience. On a call, Farley reiterated a 10% North American margin goal, recognized competition from beyond legacy automakers from firms like Tesla, Apple, and Baidu, and said mobility and software bring growth opportunities for Ford. We don’t expect radical strategic changes and expect restructuring to remain in place for a while under Farley.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

David Whiston does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.