Ford Motor (F) Down 7.1% Since Last Earnings Report: Can It Recover?

A month has passed since Ford Motor Company’s (F) last earnings report. Shares have lost about 7.1% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ford Motor poised for a breakout? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Ford’s first-quarter earnings beat estimates but fall year-over-year

Ford reported first-quarter 2024 adjusted EPS of 49 cents, topping the Zacks Consensus Estimate of 42 cents, but down from the 63 cents reported in the year-ago quarter. The company’s first-quarter consolidated revenue was $42.8 billion, up 3.1% year-over-year.

Segment efficiency

In the first quarter, the total volume of wholesale sales in Ford blue the segment decreased 11% year-on-year to 626,000 units, which means it exceeded our expectations of 670,000 units. Additionally, this segment’s revenue declined 13% year-over-year to $21.8 billion, above our estimate of $22.96 billion on lower-than-expected volume. Earnings before interest and taxes amounted to USD 905 million with an EBIT margin of 4.2%. EBIT missed our forecast of $1.9 billion.

Total volume of wholesale sales in Ford model e the segment declined 20% year-on-year to 10,000 units and exceeded our expectations at 55,000 units. Revenue for this segment declined 84% year-over-year to $0.1 billion, exceeding our estimate of $2.39 billion on lower-than-expected volume. Loss before interest and taxes widened to $1.32 billion.

Total volume of wholesale sales in Ford Pro the segment grew 21% year-on-year to 409,000 and exceeded our expectations at 354,000 units. Segment revenue also increased 36% year-over-year to $18 billion and exceeded our expectations of $14.9 billion. Earnings before interest and taxes were $3 billion with an EBIT margin of 16.7%. EBIT exceeded our forecast of $1.9 billion.

Overall, F’s total automotive revenue was approximately $39.89 billion, missing our estimate of $40.3 billion due to lower-than-expected results for Ford Blue and Ford Model e.

Revenues for the first quarter from Ford Credit unit was $2.89 billion, up 20.9% year-over-year and exceeding our estimate of $2.74 billion. Pre-tax profits were $326 million, up from $303 million reported in the same quarter last year.

Financial position

Ford reported negative adjusted free cash flow of $479 million in the quarter. As of March 31, 2024, the company had cash and cash equivalents of $19.72 billion. At the end of the first quarter of 2024, total long-term debt, excluding Ford Credit, was $19.4 billion.

The story continues

Company F has announced a second quarter 2024 regular dividend of 15 cents per share, payable on June 3, 2024, to existing shareholders at the close of business on May 8, 2024.

Guidelines 2024

For full-year 2024, Ford’s adjusted EBIT guidance remains unchanged at $10 billion to $12 billion. However, the company now expects adjusted free cash flow of $6.5 billion to $7.5 billion, up from its previous forecast of $6 billion to $7 billion. Capital spending is expected to be $8 billion to $9 billion, down from previous estimates of $8 billion to $9.5 billion.

How have estimates changed since then?

It turns out that new estimates have been trending upwards over the past month.

As a result of these changes, the consensus estimate moved by 17.33%.

VGM results

Currently, Ford Motor has an average Growth Score of C, but its Momentum Score is performing slightly better at B. Plotting a somewhat similar path, the stock is rated an A on the value side, placing it in the top quintile for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. Notably, Ford Motor carries a Zacks Rank of #3 (Hold). We expect a linear rate of return on the stock over the next few months.

Industry player performance

Ford Motor belongs to the Zacks Automotive – Domestic industry. Another stock in the same industry, Tesla (TSLA), has gained 2.1% over the past month. More than a month has passed since the company announced its results for the quarter ended March 2024.

Tesla reported revenue of $21.3 billion in its most recently reported quarter, representing a year-over-year change of -8.7%. EPS of $0.45 for the same period compared to $0.85 a year ago.

Tesla is expected to report earnings per share of $0.60 for the current quarter, representing a year-over-year change of -34.1%. Over the past 30 days, the Zacks Consensus Estimate has moved -1.4%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Tesla. The stock also has a VGM Rating of F.

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