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Will Lower Sales in North America Clip Ford (F) Q1 Earnings?
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Ford’s (F - Free Report) North America market — which accounts for bulk of total automotive revenues — is likely to have clipped first-quarter 2022 earnings. The U.S. auto giant is set to release quarterly results on Apr 27, after the closing bell.
Q4 Highlights of Ford’s North America Market
In the last reported quarter, wholesale unit volumes in the North American segment increased 11% from the year-earlier period to 599,000 units, beating the consensus mark of 567,000 units. Revenues in the North American segment rose 17% year on year to $25.8 billion. Consequently, EBIT totaled $1,822 million, higher than the $1,083 million recorded in the corresponding quarter of 2020 despite chip deficit, high commodity prices, a tight labor market and logistical challenges.
Shortage of Microchips to Play Spoilsport
Declining vehicle sales during first-quarter 2022 due to escalating supply chain issues aggravated by the Russia-Ukraine war are likely to weigh on Ford’s upcoming results. Chip woes kept a lid on vehicle supply despite robust demand.
Consequently, Ford witnessed a 17% year-over-year fall in new vehicle sales in the United States during the January-March period. Sales of Ford’s trucks contracted 23.4%, while car and SUV sales declined 49% and 5.1%, respectively. Ford’s most profitable F-Series pickups, including the F-150 and its larger versions, recorded a year-over-year sales plunge of 31% during the first quarter.
While a few of Ford’s new vehicles reported a rise in sales during the to-be-reported quarter, most of its models reported a fall. Sales of the new Bronco Sports model increased 24.5% year over year, while that of the Edge and Mustang Mach E were up 19.2% and 1.8%, respectively. Other popular SUVs brands including EcoSport, Escape, Explorer, and Expedition reported a year-over-year fall in sales of 34.6%, 2.5%, 10.4%, 34.5%, and 56.3%, respectively.
In addition to lower year-over-year deliveries, high commodity prices, a tight labor market and logistical challenges are likely to impair Ford’s upcoming results. In its last earnings call, Ford warned that commodity inflation would limit the company’s profit levels in the near term. Massive spending on modernization — including connectivity, IT and product launches — is also expected to have dented margins. Amid lower revenues and high manufacturing and operating expenses, Ford is expected to have witnessed a decline in North America market EBIT. The Zacks Consensus Estimate for EBIT from North America is pegged at $2,191 million, implying a 25.7% decrease from the year-ago period.
Ford’s Overall Earnings & Revenue Projections for Q1
The Zacks Consensus Estimate for Ford’s first-quarter earnings and revenues is pegged at 41 cents a share and $29.95 billion, respectively.
Investors should note that our proven model does not conclusively predict an earnings beat for Ford this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here. Ford currently carries a Zacks Rank #2 and has an Earnings ESP of 0.00%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are a few stocks in the auto sector that are worth considering, as these have the right combination of elements to come up with an earnings beat this time around:
Allison Transmission (ALSN - Free Report) has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.
Cummins, Inc. (CMI - Free Report) has an Earnings ESP of +1.68% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.
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Will Lower Sales in North America Clip Ford (F) Q1 Earnings?
Ford’s (F - Free Report) North America market — which accounts for bulk of total automotive revenues — is likely to have clipped first-quarter 2022 earnings. The U.S. auto giant is set to release quarterly results on Apr 27, after the closing bell.
Q4 Highlights of Ford’s North America Market
In the last reported quarter, wholesale unit volumes in the North American segment increased 11% from the year-earlier period to 599,000 units, beating the consensus mark of 567,000 units. Revenues in the North American segment rose 17% year on year to $25.8 billion. Consequently, EBIT totaled $1,822 million, higher than the $1,083 million recorded in the corresponding quarter of 2020 despite chip deficit, high commodity prices, a tight labor market and logistical challenges.
Shortage of Microchips to Play Spoilsport
Declining vehicle sales during first-quarter 2022 due to escalating supply chain issues aggravated by the Russia-Ukraine war are likely to weigh on Ford’s upcoming results. Chip woes kept a lid on vehicle supply despite robust demand.
Consequently, Ford witnessed a 17% year-over-year fall in new vehicle sales in the United States during the January-March period. Sales of Ford’s trucks contracted 23.4%, while car and SUV sales declined 49% and 5.1%, respectively. Ford’s most profitable F-Series pickups, including the F-150 and its larger versions, recorded a year-over-year sales plunge of 31% during the first quarter.
While a few of Ford’s new vehicles reported a rise in sales during the to-be-reported quarter, most of its models reported a fall. Sales of the new Bronco Sports model increased 24.5% year over year, while that of the Edge and Mustang Mach E were up 19.2% and 1.8%, respectively. Other popular SUVs brands including EcoSport, Escape, Explorer, and Expedition reported a year-over-year fall in sales of 34.6%, 2.5%, 10.4%, 34.5%, and 56.3%, respectively.
In addition to lower year-over-year deliveries, high commodity prices, a tight labor market and logistical challenges are likely to impair Ford’s upcoming results. In its last earnings call, Ford warned that commodity inflation would limit the company’s profit levels in the near term. Massive spending on modernization — including connectivity, IT and product launches — is also expected to have dented margins. Amid lower revenues and high manufacturing and operating expenses, Ford is expected to have witnessed a decline in North America market EBIT. The Zacks Consensus Estimate for EBIT from North America is pegged at $2,191 million, implying a 25.7% decrease from the year-ago period.
Ford’s Overall Earnings & Revenue Projections for Q1
The Zacks Consensus Estimate for Ford’s first-quarter earnings and revenues is pegged at 41 cents a share and $29.95 billion, respectively.
Investors should note that our proven model does not conclusively predict an earnings beat for Ford this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here. Ford currently carries a Zacks Rank #2 and has an Earnings ESP of 0.00%.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are a few stocks in the auto sector that are worth considering, as these have the right combination of elements to come up with an earnings beat this time around:
Allison Transmission (ALSN - Free Report) has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.
Cummins, Inc. (CMI - Free Report) has an Earnings ESP of +1.68% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.