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Will Surging Sales in China Beef Up Ford's (F) Q4 Earnings?
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Ford’s (F - Free Report) fourth-quarter earnings are likely to have benefited from the rising vehicle sales in China, where the company commands a strong presence. The company is set to release quarterly results tomorrow after the closing bell.
In the last reported quarter, vehicles sold in the China segment totaled 164,352, up 25.4% year over year, marking its largest growth since the fourth quarter of 2016. The reported figure also improved 3.6% sequentially. Sales of Ford, Lincoln and JMC brand vehicles registered year-over-year growth of 12.5%, 64.8% and 38.3%, respectively, in China.
Ford’s third-quarter sales in China gained traction on the growing consumer preference in the nation for the brand as well as a favorable product mix of luxury and near-premium utility vehicles.
Revenues in China climbed 15% year over year to $1 billion during the third quarter. Further, wholesale volume increased 22% from the prior-year figure to 164,000 units. The region reported a negative EBIT of $58 million, narrower than the year-ago loss of $281 million.
China Market to Buoy Ford’s Q4 Results
The auto sector in China has been battling a slump since hitting its peak in 2017, thanks to the rigid emission standards, rising popularity of ride-sharing platforms and a sluggish economy. Moreover, the coronavirus pandemic, which originated in China, further aggravated this sales slump.
Nonetheless, China, the world’s biggest auto market, was the first nation to reopen its economy after the health crisis was declared under control last March. The Chinese market began to recover in the second quarter of 2020, supported by government stimulus measures to drive vehicle sales. Since then, the monthly Chinese auto sales have been registering growth after hitting rock bottom in March.
Ford has been witnessing shrinking sales in the country amid the lackluster Chinese economy and the long-standing U.S.-Sino trade tiff. Sales were also believed to be hurt by an aging model line-up, and strained relationships with its joint-venture partners as well as dealers.
Ever since the business began suffering in late 2017, Ford has been making moves to revive sales in China. Consequently, the company’s sales in China started gaining momentum in the second quarter of 2020.
Markedly, during the fourth quarter, Ford’s total vehicle sales in the Chinese market summed 190,916 vehicles, up 30.3% year on year and 16.2% sequentially.
The encouraging results are primarily owing to the company’s favorable product mix which is much more in sync with Chinese consumers’ preferences for SUVs and luxury vehicles. The company has optimized its product portfolio in China and has started local production of world-class Ford and Lincoln vehicles to cater to the rising Chinese customer demand. The company’s refreshed and revived product line-up includes several new vehicles, such as Ford Explorer and Escape, as well as Lincoln Corsair and Aviator.
Lincoln brand luxury vehicle sales in China achieved new quarterly records in 2020. The fourth-quarter sales exceeded 22,600 units, surging 74.9% year on year.
Ford brand vehicle sales in China for the quarter in discussion came in at 104,000 units, up 24.7% year on year. Further, JMC brand commercial vehicle sales in the country exceeded 64,300 units in the October-December quarter, up 28.2% year on year.
We believe stellar revenues from the Chinese segment are likely to have fueled this Zacks Rank #1 (Strong Buy) company’s fourth-quarter top and bottom lines, partly offset by softer revenues from the American and European markets, among others.
Along with Ford, here are a few other stocks lined up to release fourth-quarter results in February. Encouragingly, our model predicts an earnings beat for these stocks as well:
BorgWarner (BWA - Free Report) has an Earnings ESP of +2.94% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 11.
Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.
Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release fourth-quarter numbers on Feb 19.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
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Will Surging Sales in China Beef Up Ford's (F) Q4 Earnings?
Ford’s (F - Free Report) fourth-quarter earnings are likely to have benefited from the rising vehicle sales in China, where the company commands a strong presence. The company is set to release quarterly results tomorrow after the closing bell.
(Also Read: Ford to Post Q4 Earnings: What's in Store for the Stock?)
Q3 Highlights for Ford’s China Market
In the last reported quarter, vehicles sold in the China segment totaled 164,352, up 25.4% year over year, marking its largest growth since the fourth quarter of 2016. The reported figure also improved 3.6% sequentially. Sales of Ford, Lincoln and JMC brand vehicles registered year-over-year growth of 12.5%, 64.8% and 38.3%, respectively, in China.
Ford’s third-quarter sales in China gained traction on the growing consumer preference in the nation for the brand as well as a favorable product mix of luxury and near-premium utility vehicles.
Revenues in China climbed 15% year over year to $1 billion during the third quarter. Further, wholesale volume increased 22% from the prior-year figure to 164,000 units. The region reported a negative EBIT of $58 million, narrower than the year-ago loss of $281 million.
China Market to Buoy Ford’s Q4 Results
The auto sector in China has been battling a slump since hitting its peak in 2017, thanks to the rigid emission standards, rising popularity of ride-sharing platforms and a sluggish economy. Moreover, the coronavirus pandemic, which originated in China, further aggravated this sales slump.
Nonetheless, China, the world’s biggest auto market, was the first nation to reopen its economy after the health crisis was declared under control last March. The Chinese market began to recover in the second quarter of 2020, supported by government stimulus measures to drive vehicle sales. Since then, the monthly Chinese auto sales have been registering growth after hitting rock bottom in March.
Ford has been witnessing shrinking sales in the country amid the lackluster Chinese economy and the long-standing U.S.-Sino trade tiff. Sales were also believed to be hurt by an aging model line-up, and strained relationships with its joint-venture partners as well as dealers.
Ever since the business began suffering in late 2017, Ford has been making moves to revive sales in China. Consequently, the company’s sales in China started gaining momentum in the second quarter of 2020.
Markedly, during the fourth quarter, Ford’s total vehicle sales in the Chinese market summed 190,916 vehicles, up 30.3% year on year and 16.2% sequentially.
The encouraging results are primarily owing to the company’s favorable product mix which is much more in sync with Chinese consumers’ preferences for SUVs and luxury vehicles. The company has optimized its product portfolio in China and has started local production of world-class Ford and Lincoln vehicles to cater to the rising Chinese customer demand. The company’s refreshed and revived product line-up includes several new vehicles, such as Ford Explorer and Escape, as well as Lincoln Corsair and Aviator.
Lincoln brand luxury vehicle sales in China achieved new quarterly records in 2020. The fourth-quarter sales exceeded 22,600 units, surging 74.9% year on year.
Ford brand vehicle sales in China for the quarter in discussion came in at 104,000 units, up 24.7% year on year. Further, JMC brand commercial vehicle sales in the country exceeded 64,300 units in the October-December quarter, up 28.2% year on year.
We believe stellar revenues from the Chinese segment are likely to have fueled this Zacks Rank #1 (Strong Buy) company’s fourth-quarter top and bottom lines, partly offset by softer revenues from the American and European markets, among others.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks to Consider
Along with Ford, here are a few other stocks lined up to release fourth-quarter results in February. Encouragingly, our model predicts an earnings beat for these stocks as well:
BorgWarner (BWA - Free Report) has an Earnings ESP of +2.94% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 11.
Allison Transmission Holdings (ALSN - Free Report) has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.
Magna International (MGA - Free Report) has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release fourth-quarter numbers on Feb 19.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>