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Ford Motor is the fifth-largest auto maker in the world based on the number of vehicles it sold last year, but it barely cracks the top 15 in stock market value. The gap says everything about how Ford is viewed today—and the potential opportunity for investors.

Once near the pinnacle of global auto-making in reputation, revenue, and profits, Ford these days is considered by many investors and Wall Street analysts as an also-ran. It’s trailing far behind some of its rivals in the race to produce electric and autonomous vehicles. And even in gas-powered autos, Ford (ticker: F) is struggling to match competitors, such as General Motors (GM) and Volkswagen (VOW3.Germany), on quality and profitability.

Its shares, saddled with a single-digit price/earnings ratio, have been laggards, too, returning a negative 3.9% annually, on average, over the past five years, while the stock market has been pumping out double-digit gains. Ford’s market capitalization recently was $36 billion, versus $65 billion for GM and $95 billion for VW, not to mention Tesla’s (TSLA) more than $550 billion.

Ford’s standing with investors hasn’t been helped by the fact that it is on its third CEO in six years. Its current leader, James D. Farley, faces formidable challenges. The 58-year-old auto industry veteran, who took over in October after serving as Ford’s chief operating officer, must streamline the company’s design and procurement processes, re-establish its “quality is job No. 1” reputation, drive it into an all-electric future, and clearly communicate its strategy. Says Credit Suisse analyst Dan Levy: “Farley has to turn around performance, and make cost improvements on the warranty and material side.”

The good news is that the new boss’ domestic and international experience at Ford and at Toyota Motor’s luxury Lexus brand probably have equipped him to deal with Ford’s quality and efficiency issues, and to lead it into an electric future. If he succeeds, Ford shares could surge. “There is work to be done,” says Benchmark analyst Mike Ward. “But Ford stock can double.”

Despite its recent woes, Ford is still massive, annually selling about $150 billion worth of cars and trucks. Its iconic F-150 pickup has been the top-selling vehicle in the U.S. for nearly four decades.

Sales of that model and its heftier F-250, F-350, and F-450 stable mates helped Ford post adjusted earnings of 65 cents in the third quarter, well above the 19 cents consensus forecast, prompting the company to boost its full-year forecast. It now expects to be profitable in 2020; earlier, it had foreseen a loss.

A redesign of the 2021 F-150, now at dealerships, could help maintain the momentum. So should the launches of the Ford Bronco and the electric Mustang Mach-E. The Bronco, which will be available soon, is a descendant, at least in name, of the truck that was discontinued a quarter-century ago. It will compete with Fiat Chrysler Automobile’s Jeep Wrangler, a darling of off-roading enthusiasts around the world. The Mach-E, which has started shipping, isn’t a coupe like the gas-powered Mustang. Instead, it’s a cross between a sedan and an SUV, with a range, Ford claims, of up to 300 miles.

About a fifth of Ford’s automotive sales—it also has a huge finance unit—comes from its European operations, with the remainder from the U.S., save for a smattering in Asia and South America.

For years, mediocre profitability has bedeviled Ford. It makes money in the U.S., but loses it in Europe and some other markets. Last year, it reported adjusted earnings of $1.19 a share, down from $1.30 in 2018 and, tellingly, about 27% less than it had made six years earlier.

The company doesn’t disclose profits by product line, but the lion’s share of its earnings comes from its North American light-truck business. Ford Motor Credit—the auto-loan unit—is its other big money maker, routinely churning out about $2 billion to $3 billion in annual pretax profit.

Over the past three years, the company has produced about $23 billion in cumulative adjusted operating earnings on sales of $473 billion. That works out to an operating profit margin of about 4.9%. That compares with GM’s and Fiat Chrysler’s (FCAU) 7.6%. BMW (BMW.Germany) and Toyota Motor (TM) generate some of the strongest operating margins in the industry, at 8.8% and 7.9%, respectively.

A big part of the problem is quality, which shows up in Ford’s payments for repairs done under warranty. They totaled close to $13 billion, or about $700 a car, on the 18 million cars it sold over the past three years. GM, in comparison, spent about $9 billion on 26 million vehicles, or around $350 each, in the same span, while Toyota forked over roughly $15 billion, or $555 per vehicle, on almost 27 million cars and trucks. Reducing its warranty costs to GM’s level would save Ford almost $2 billion annually.

Ford’s brass understands the problem and has brought a sense of urgency to addressing it. “We are laser-focused on fixing the automotive operations,” Chief Financial Officer John Lawler recently told Credit Suisse clients.

The operational issues, however, are less of an existential threat than the shift to electric vehicles. To put it plainly: Ford is far behind some other auto makers, especially GM and Volkswagen, in the race to switch from internal-combustion engines to electric motors.

GM plans to spend $27 billion on electrification and autonomous-driving systems by 2025, and to offer 30 all-electric vehicles globally by then. Two years ago, Ford announced that it would spend $11 billion on vehicle electrification, launching 40 EVs by 2022. But there’s a big difference between “electrified”—which covers hybrid and plug-in hybrid cars and trucks, as well as fully electric vehicles—and “electric,” which denotes only vehicles fully powered by batteries.

Ford has focused on adding hybrid technology to existing platforms. That improves fuel efficiency, but adds complexity. And, as battery costs fall, hybrid vehicles look less like an answer. EVs certainly are coming to Ford—the Mach-E is now shipping—but the Dearborn, Mich.–based car maker is playing catch-up.

Its plight, however, should be eased by an alliance that it has negotiated with Volkswagen. Under it, the two will jointly develop eight million cars and trucks, with Ford responsible for some commercial vehicles and VW supplying electrification technology and small-car expertise. The deal will save cash for both companies.

Ford said that it couldn’t provide Barron’s with access to its leaders before the Thanksgiving holiday, but a representative commented, “The partnership is part of our plan to be more capital-efficient and assure access to expertise, our own and from others. We will design an EV for Europe on Volkswagen’s platform.” (There has been speculation about the companies more closely allying, perhaps eventually even merging, but both have denied such a possibility.)

Better capital allocation and sharing platforms could help the U.S. car maker bolster its profits. Ford is targeting operating margins of 10% in North America, 6% in Europe, and 8% overall. An 8% global margin over the past three years would have produced $15 billion in additional operating income. The opportunity for improvement is enormous.

In addition, Ford already has announced billions in cost-cutting programs that are at various stages of implementation. In North America, responding to consumers’ continuing shift to sport utility vehicles, crossovers, and pickups, Ford has stopped making sedans. In fact, it now sells only one car in the U.S.—the gasoline-powered Mustang.

That makes sense. Ford sold about 2.1 million trucks in the States in 2019, versus just 350,000 cars. And each platform—the basic structure, including the body and suspension, underpinning a vehicle—adds costs. From now on, Ford will employ just five global platforms, versus nine in 2017 and 30 in 2007.

A pressing need for the U.S. auto giant is to fix its European operations. Ford Europe has lost money in two consecutive years. To hit its profit goal in the region, Ford must wring out $1 billion to $2 billion in annual costs, without compromising quality.

A big plus is the company’s leadership overseas in commercial vehicles, such as vans. In Europe, Ford has about a 14% share of the commercial market.

And trucks are where Ford is focusing its electrification push. The company is launching electric versions of its popular Transit delivery van in 2021, and the F-150 in 2022. And the Rivian, an all-electric pickup truck from a start-up in which Ford took a $500 million stake last year, could arrive before the F-150.

“Our electrification strategy plays to our strengths, pickups, vans, performance vehicles, utilities—segments where we are strong, segments where margins are good,” said Ashwani Kumar Galhotra, president of Americas & International Markets Group at Ford, at a recent investor conference. “Our F-Series vehicles have been bestselling vehicles for 43 years, and an all-electric F-150 will be a great addition to that portfolio.”

Vehicle electrification should help Ford deal with its problems in Europe, a market that GM has almost entirely abandoned. Climate change and pollution reduction are major issues there. Some European governments offer tax and other incentives to encourage sales of EVs. This should aid sales of Ford’s electric Transit vans. Ford even believes that it eventually will be able to generate revenue by selling regulatory credits linked to commercial vehicles that exceed emission-control standards. Over the years, Tesla has sold about $3.5 billion in credits earned by its zero-emission electric vehicles. Without them, it would have been hard-pressed to report any profits.

In Europe, Ford already exceeds emission standards for commercial vehicles. But it hasn’t been able to meet the standards on the passenger-vehicle side, in part because of problems with its Kuga plug-in hybrid crossover, a European version of the Ford Escape sold in the U.S.

Despite its grand plans, Ford hasn’t convinced Wall Street that its electrification campaign will be broad or swift enough to meaningfully boost its future prospects.

Its stock was downgraded to Equal Weight from Overweight by Morgan Stanley analyst Adam Jonas this past week, partly because, he says, he doesn’t have a clear grasp of Ford’s EV strategy. Right now, no one knows whether an electric F-150 will be profitable and, if so, how much revenue and profit it’s likely to generate. Indeed, one of Farley’s big challenges is to persuasively communicate Ford’s goals for electrification, particularly its effect on margins. If investors doubt that the auto maker is on the right track, its shares will keep spinning their wheels.

Ford doesn’t need to immediately make a big splash in electrification for the stock to be a winner. Value investors point to Ford’s dismal valuation as a reason to own the stock, which trades at about nine times next year’s estimated 2021 earnings of $1.04 a share. But the company’s renewed focus on improving operations, and the continuing rebound in U.S. car sales, could push profits much higher.

If Ford hits its margin goals of 8%, it could generate $10 billion to $11 billion, or $2.50 to $3 a share, in net income, says Benchmark’s Ward. If it could command just its five-year average of seven times earnings, the stock could trade above $20. Producing earnings that high might be a stretch. But if Ford manages to raise profits to even $2 a share—a number it approached in 2015—a P/E of seven would put its shares at $14, more than 50% above its recent close of $9.08.

Ward has an $11 target on Ford—nine times his estimated 2021 earnings of $1.25 a share—but he is bullish on the future beyond 2021 and believes that the stock could hit $20 again.

Not everyone is sold of the company’s outlook. “The near-term fixes might not be enough,” Credit Suisse’s Levy warns. “[Farley] has to prove Ford is ready for electrification.”

The alliance with Volkswagen should help that. And if the Mach-E sells well, and the Rivian is a success, investors might start to give Ford some electric cred.

The auto maker has another big thing going for it: a solid balance sheet.

In normal years, Ford generates billions in annual free cash flow. While it had negative adjusted cash flow of $5.3 billion in this year’s Covid-battered second quarter, that rebounded to a positive $6.3 billion in the third.

A lot of Ford’s cash has been used to trim debt or fortify its pension plans, which have gone from less than 80% funded a decade ago to more than 90% funded now. This means that Ford will need to put only a manageable amount into them in the future; $1 billion a year looks sustainable.

In addition, the corporation’s net debt position has fallen by about $24 billion since the 2008-09 financial crisis. Ford’s core automotive operations now have $24 billion in obligations and $29.5 billion in cash.

All of this has freed up cash for investments and, when the pandemic eases, restoration of share buybacks and dividends. Many investors probably don’t realize this; it’s another important point that Farley & Co. must emphasize to investors. (For more on Ford’s payout prospects, see “GM and Ford Could Start Paying Dividends Again. What It Means for Their Stocks.”.)

A comeback is no slam-dunk. But the car maker’s financial strength gives it some time to figure out the transition to battery-powered vehicles and to raise profitability. If Farley’s team gets it right, the stock could shed the single-digit multiple that has dogged it for years. For Ford shareholders, that would be truly electrifying.