Ford (F – Free Report) is slated to release fourth-quarter 2022 results on Feb 2, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 59 cents a share. The bottom-line projection implies year-over-year growth of 127%. The Zacks Consensus Estimate for Ford’s fourth-quarter earnings per share has remained unchanged in the past 60 days.
The U.S. auto biggie missed earnings estimates in the last reported quarter amid lower-than-expected profits in its North America segment and plummeting revenues and widening pretax loss in the China unit. Over the trailing four quarters, Ford surpassed earnings estimates once and missed on the other three occasions, the average surprise being 3.21%. This is depicted in the graph below:
Ford’s third-quarter adjusted earnings came in at 30 cents per share, missing the Zacks Consensus Estimate of 31 cents. The bottom line declined 41.2% from the year-ago quarter’s earnings of 51 cents. The company’s consolidated third-quarter revenues came in at $39.4 billion, rising 10% year over year.Revenues from the Automotive segment increased 12% to $37.2 billion but lagged the Zacks Consensus Estimate of $38.6 billion.
Ford reported an adjusted free cash flow of $3,601 million during the quarter. It had cash and cash equivalents of $21.5 billion as of Sep 30, 2022, compared with $20.5 billion on Dec 31, 2021. The automotive long-term debt increased to $19,073 million from $17,200 million as of the end of 2021.
Things to Note Ahead of Q4 Release
Ford’s fourth-quarter revenues are likely to have been aided by a projected increase in total wholesale units. The Zacks Consensus Estimate for total wholesale shipments worldwide is pegged at 1,209,000 units, indicating an increase from 1,105,000 units in the year-ago period. The consensus mark for fourth-quarter revenues from automotive sales is $39,402 million, implying an uptick from $35,300 million recorded in the corresponding quarter of 2021. The Zacks Consensus Estimate for adjusted EBIT from the segment is pegged at $3,631 million, implying growth from $1,638 million recorded in the fourth quarter of 2021.
The consensus mark for revenues from Ford Credit is pegged at $2,235 million, implying a decrease from $2,373 million. The consensus mark for adjusted EBIT from the segment is $338 million, suggesting a fall from $1,055 million in the fourth quarter of 2021. Profits from Ford Credit will likely be lower as auction values are expected to have been moderated by the nonrecurrence of reserve releases, fewer returned off-lease vehicles and more normalized credit losses.
The consensus mark for revenues from Ford Mobility is pegged at $42.9 million, implying a decline from $48 million. The consensus mark for loss before interest and taxes from the segment is $222 million.
While stronger year-over-year results from the firm’s Automotive segment bode well, poor performances from Ford Credit and Mobility units are likely to have played spoilsports. Further, massive spending on modernization, including connectivity, IT and new product launches, are expected to have limited earnings to some extent.
Our proven model does not conclusively predict an earnings beat for Ford for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. 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. This is not the case here.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Ford has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is in line with the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
While an earnings beat looks uncertain for Ford, here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Lear (LEA – Free Report) will release fourth-quarter 2022 results on Feb 2. The company has an Earnings ESP of +4.29% and a Zacks Rank #3.
The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $2.53 per share and $5.26 billion, respectively. LEA surpassed earnings estimates in the trailing four quarters, with the average surprise being 18%.
Harley-Davidson (HOG – Free Report) is expected to report fourth-quarter 2022 results by mid-February. The company has an Earnings ESP of +300.00% and a Zacks Rank #2.
The Zacks Consensus Estimate for Harley-Davidson’s to-be-reported quarter’s earnings and revenues is pegged at 3 cents per share and $880.5 million, respectively. HOG surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 43.3%.
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