Auto giant Ford (NYSE:F) is set to report third-quarter earnings after the bell on Wednesday, and it looks like the market is already pricing in bad news. Ford stock is down more than 2% on the day, and it has dropped more than 15% since the last earnings report. It now trades at its lowest level since mid-2012.

There is a reason the market is so pessimistic on Ford stock. The operating backdrop is unfavorable. Interest rates are rising. Auto sales are slowing. The whole China market is in free fall. Tesla (NASDAQ:TSLA) is ramping production and presumably stealing market share. The whole auto market is shrinking due to waning demand as a result of ride-sharing and at-home economy trends. Margins are under pressure from tariffs.

Overall, there are a ton of headwinds weighing on Ford stock right now. That is why the stock has dropped in a big way over the past several years, and also why the market expects more pain ahead.

But, Ford stock is also pretty cheap at current levels. Ford stock is trading at just over 6x forward earnings. Moreover, if you assume that we aren’t heading into a recession and that revenues and margins stabilize with stabilized demand, then this year’s $1.30 earnings base has room to grow. In that scenario, you have a stock trading at 6x forward earnings with mild earnings growth potential.

That combination makes Ford stock look incredibly attractive at current levels. But, that bull thesis rests on the assumption that we aren’t heading into a recession. I don’t think we are, and as a result, I think the contrarian thesis on Ford stock is starting to make sense.

The Story Is Troubled, And Earnings Won’t Be Good

In simple terms, the Ford growth narrative is really troubled right now, and likely won’t get meaningfully better any time soon. As such, I expect earnings to be not that good, and for the market to maintain a pessimistic outlook on Ford stock for the foreseeable future.

In the big picture, Ford is staring at a ton of headwinds that threaten near- and medium-term revenue and profit growth. Interest rates are on their way up, and as those rates go up, consumers are tapering back on big-ticket purchases like homes and autos. That is no good for Ford’s revenue growth. Meanwhile, the entire China market is in freefall, and Tesla is simultaneously stealing auto market share from Ford and others. That also is no good for Ford’s revenue growth.

On the margin front, tariffs are starting to have a real impact on input costs. That is no good for Ford’s margins. And, in a longer-term view, rising trends in ride-sharing and the at-home economy are pulling down car ownership rates. That is no good for Ford’s revenues or profits.

Overall, the operating backdrop is presently troubled for Ford. There is no end in sight to these troubles. The U.S. and China don’t appear to be getting closer to easing trade tensions, while Tesla is only growing in popularity, ride-sharing trends are only picking up traction and interest rates are only heading higher.

Because of this, Q3 earnings won’t be good. We already have the sales numbers. U.S. sales in Q3 were sluggish. Europe sales started off positive and then turned sharply negative toward the end of the quarter. China sales are in absolute free fall, and the declines are only getting bigger.

Meanwhile, the outlook for margins isn’t too optimistic, either. Everyone is warning about rising costs from tariffs. Ford will likely do the same in the Q3 report and call. That will likely dampen investor enthusiasm even more, and cause further weakness in Ford stock.

But Ford Stock Is Cheap Under Reasonable Assumptions

We all know that Ford is in the midst of an ugly operating environment. But, Ford’s stock price already reflects this. In 2014, this was a $16 stock trading at 10x forward earnings. Today, it is an $8 stock trading at 6x forward earnings.

How much lower can we go?

If you think a repeat of the 2008 Recession is right around the corner, then we can still go much lower. At its low during that crisis, Ford had a market cap of $5 billion. Today, Ford has a market cap of over $30 billion. Thus, if the financial system is once again on the brink of collapse and credit markets globally freeze up, Ford stock could drop by a lot more.

For the record, I don’t think we are heading into a Doomsday scenario. Growth is still healthy; margins are still high; the consumer is still confident. Net debt levels are still checked. Financial balance sheets are still firmed up. Everything is still good. Just less good than before. As such, I think Ford’s revenues and earnings will stabilize going forward. I don’t think this is a big growth story. But, it is a company that, so long as economic growth in the U.S. remains stable, will have stable growth prospects over the next few years.

At 6X forward earnings, stable simply isn’t priced in. Thus, under reasonable assumptions that the American economy isn’t heading for a cliff anytime soon, Ford stock looks pretty cheap.

Bottom Line on F Stock

Ford stock has been beaten up for a reason, and Q3 earnings will likely confirm recent fears. But, in a longer-term window, Ford stock looks incredibly cheap so long as the American economy isn’t heading for a recession.

As of this writing, Luke Lango was long TSLA and may initiate a long position in Ford stock within the next 72 hours.