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Can These 3 Automakers Shift Into High Gear Post-Earnings?

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·5 min read
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The Zacks Auto, Tires and Trucks Sector has been hit hard throughout 2022, decreasing nearly 30% in value. However, the sector has a solid 8.6% return over the last month.

Three companies residing in the sector – General Motors GM, Ford Motor F, and Toyota Motor TM – are all slated to release quarterly results within the next two weeks. The chart below illustrates the year-to-date share performance of all three companies.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

As we can see, it’s been a trying time for all three companies’ shares in 2022, although Toyota shares have held up relatively well compared to F and GM.

Let’s examine each company a little closer to see how they shape up heading into their respective quarterly reports.

Ford Motor

Ford F is currently a Zacks Rank #4 (Sell) with an overall VGM Score of a B. Over the last 60 days, one analyst has lowered their quarterly outlook. Heading into the report, Ford has an Earnings ESP Score of 3.7%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom-line projections for the quarter display serious growth. The Zacks Consensus EPS Estimate resides at $0.43, penciling in a 230% triple-digit uptick in quarterly earnings year-over-year.

The company’s top-line is also in exceptional shape; Ford is projected to generate $32.8 billion in revenue, a sizable 35% expansion in quarterly revenue year-over-year.

The chart below illustrates the company’s revenue on a quarterly basis.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Ford shares could be undervalued, further displayed by its Style Score of an A for Value. The company’s forward P/E ratio resides at 6.7X, nicely below its five-year median of 7.2X, and represents a steep 62% discount relative to the S&P 500’s value of 17.6X.

In addition, Ford has primarily reported bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in six of its previous ten quarterly reports. However, the company has posted two consecutive bottom-line misses in its latest two quarters.

Top-line results have repeatedly been above expectations as well; Ford has chained together eight consecutive top-line beats.

General Motors

General Motors GM is currently a Zacks Rank #3 (Hold) with an overall VGM Score of a B. Analysts have been bearish in their quarterly outlook over the last 60 days, with three downwards estimate revisions. Heading into the quarterly report, GM carries an Earnings ESP Score of -7.4%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Bottom-line projections display some weakness. For the quarter, the Zacks Consensus EPS Estimate resides at $1.40, penciling in a nearly 30% decline in earnings year-over-year.

However, top-line estimates display strength; General Motors is forecasted to rake in $36.5 billion in revenue for the quarter, good enough for a 7% uptick in quarterly revenue year-over-year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

GM sports a beautifully low 5.1X forward earnings multiple, well below its five-year median of 6.6X and represents an attractive 71% discount relative to the S&P 500.

In addition, GM boasts a Style Score of an A for Value.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

General Motors is on an impressive earnings streak; the company has chained together ten consecutive bottom-line beats. In its latest quarter, the company recorded a rock-solid 34% bottom-line beat.

However, top-line results leave much to be desired. Over the company’s previous ten quarterly reports, GM has exceeded quarterly sales expectations just four times.

Toyota Motor

Toyota Motor TM carries a Zacks Rank #3 (Hold) with an overall VGM Score of an A. In addition, one analyst has positively revised their earnings outlook, with the Consensus Estimate Trend climbing by 8%.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

A weak earnings report could be in store. For the quarter to be reported, the Zacks Consensus EPS Estimate resides at $3.77, notching a disheartening 35% drop in quarterly earnings year-over-year.

Additionally, the top-line is projected to take a hit – the $63.6 billion quarterly revenue estimate reflects a 12% double-digit decline in quarterly sales year-over-year.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Like Ford and General Motors, Toyota boasts a Style Score of an A for Value, indicating that shares could be undervalued.

Its 9.1X forward earnings multiple is a tick below its five-year median of 9.6X and represents a substantial 48% discount relative to the S&P 500.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Toyota has been on a blazing-hot earnings streak, chaining together ten consecutive EPS beats. In addition, the company recorded a 40% double-digit bottom-line beat in its latest quarter.

Top-line results have been just as stellar, with the company exceeding top-line expectations in nine of its previous ten quarterly reports.

Bottom Line

The microchip shortage and soaring commodity prices will be major headwinds in all three companies’ quarterly reports. The chip shortage has been accelerated by tensions in Ukraine and is not expected to subside for some time, slashing overall vehicle production.

In addition, soaring commodity prices, such as steel and aluminum, will undoubtedly be a root cause of margin compression and overall increased vehicle production costs.


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Ford Motor Company (F) : Free Stock Analysis Report
 
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