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Why is Ford (F) Up 3% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for Ford Motor Company (F - Free Report) . Shares have added about 3% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is F due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ford's Q1 Earnings & Revenues Beat Estimates, Up Y/Y

Ford posted adjusted earnings per share of 43 cents in the first quarter of 2018. The reported figure was 3 cents higher than the year-ago figure. Also, earnings beat the Zacks Consensus Estimate of 41 cents per share.

The company identified an incremental $11.5 billion of costs and efficiency opportunities. It expects adjusted EBIT margin of 8% by 2020, two years earlier than the previous target. It also intends to lower the cumulative capital spending by $5 billion between 2019 and 2022.

First-quarter net income was $1.7 billion, reflecting an increase of $0.1 billion from the year-ago quarter.

During the reported quarter, Ford logged automotive revenues of $39 billion, up from the prior-year quarter figure of $36.5 billion. Its Zacks Consensuses Estimate for revenues was $37 billion.

Ford Automotive

During the reported quarter, wholesale volumes at the Ford Automotive segment decreased 41,000 units to 1.66 million. Earnings before income and taxes (EBIT) decreased to $1.7 billion from $2.1 billion in the year-ago quarter.

In North America, during the reported quarter, revenues increased $0.8 billion to $24.8 billion. Wholesale volumes increased 25,000 units year over year to 796,000. Further, EBIT decreased to $1.9 billion from $2.1 billion in first-quarter 2017.

In South America, revenues increased $0.2 billion to $1.3 billion. Wholesale volumes rose 16,000 to 86,000 units. Pre-tax loss amounted to $149 million.

In Europe, revenues increased $1.3 billion to $8.9 billion. Wholesale volumes remained flat around 449,000 units. The region incurred EBIT of $119 million during the quarter.

In the Middle East & Africa segment, revenues remained flat around $0.6 billion. Wholesale volumes plunged 5,000 to 25,000 units. The region incurred pre-tax loss of $54 million.

In the Asia-Pacific region, revenues increased $0.2 billion to $3.4 billion. Wholesale volumes declined 77,000 to 306,000 units. The region generated pre-tax loss of $119 million.

Financial Services

Ford Credit generated EBIT of $641 million, up from $481 million in the prior-year quarter.

Financial Position

Ford had cash and cash equivalents of $17.9 billion as of Mar 31, 2018, up from $9.6 billion as of Dec 31, 2017.

2018 Guidance

The company expects 2018 adjusted EPS of $1.45-$1.70 and an effective tax rate of 15%. Revenues in 2018 are anticipated to be modestly higher than 2017.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to three lower.

Ford Motor Company Price and Consensus

 

Ford Motor Company Price and Consensus | Ford Motor Company Quote

VGM Scores

At this time, F has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Interestingly, F has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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