Ford F is slated to release first-quarter 2020 results on Apr 28, after the closing bell. The company’s earnings and revenues are likely to have been adversely impacted by depressed demand for vehicles, thanks to coronavirus impact.
We know that the COVID-19 pandemic has rattled the auto industry, with factory closures, low footfall at dealerships and supply chain disruptions. What started as an epidemic in China early this year has taken the shape of a pandemic and disrupted the entire economy. Amid the coronavirus rampage, Ford has been forced to shutter majority of operations across the globe. With customers putting off spending on big-ticket discretionary items due to the pandemic-led uncertainty and financial crisis, the company recently issued a warning about first-quarter results.
Ford anticipates adjusted pretax loss of $600 million for the first quarter.It expects to incur a one-time charge of $300 million in the first quarter. The company expects revenues of $34 billion, indicating a 16% year-over-year decline. First-quarter vehicle wholesale shipments declined 21% from the corresponding period of 2019. Ford anticipates a net loss of $2 billion in first-quarter 2020.
Notably, the U.S. auto biggie reported weaker-than-expected results in the last reported quarter, primarily on the back of lower revenues across all major markets served. Over the trailing four quarters, Ford beat estimates on three occasions and missed in the other, with the average positive surprise being 19.3%.
Ford Motor Company Price and EPS Surprise
Ford Motor Company price-eps-surprise | Ford Motor Company Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for earnings stands at 4 cents per share, indicating a 91% decline from the year-ago reported figure. With the coronavirus outbreak dealing a severe blow to the company, estimates for first-quarter earnings per share has been downwardly revised by 6 cents in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $30.1 billion, pointing to a year-over-year decline of more than 19%.
Factors to Note
Decline in vehicle sales across all major markets served — including North America, China and Europe — is likely to have weighed on Ford’s first-quarter 2020 sales and earnings.
The Zacks Consensus Estimate for revenues in the North American region — which is the most significant market for the company — is pegged at $23,237 million, indicating a decline from the year-ago figure of $25,400 million. Lower vehicle sales amid bleak demand for passenger cars and SUVs due to the coronavirus outbreak and stay-at-home orders in multiple states are likely to have impacted revenues in the to-be-reported quarter. Demand for passenger cars and SUVs declined 36% and 11%, respectively, in the first quarter of 2020.
The Zacks Consensus Estimate for revenues from the European market is pegged at $5,232 million, suggesting a decline from the year-ago reported figure of $7,600 million.The consensus mark for revenues from the Asia Pacific and African market is pegged at $1,053 million, suggesting a decline of 41.5% from the year-ago quarter. Amid unprecedented business shutdown due to coronavirus, Ford’s sales declined 34.9% year over year in China during the to-be-reported quarter.
The proven Zacks model does not conclusively predict an earnings beat for Ford this time around. 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. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.
Earnings ESP: It has an Earnings ESP of -314.29% as the Most Accurate Estimate is pegged at a loss of 8 cents against the Zacks Consensus Estimate of earnings of 4 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Ford currently carries a Zacks Rank #3.
Stocks to Consider
Here are some companies, which according to our model have the right combination of elements to post an earnings beat in the to-be-reported quarter.
Anthem, Inc. ANTM has an Earnings ESP of +1.28% and a Zacks Rank #3. The company is slated to release first-quarter 2020 earnings on Apr 29.
Cigna Corporation CI is scheduled to report first-quarter 2020 earnings on Apr 30. The firm has an Earnings ESP of +1.53% and a Zacks Rank #2.
Virtu Financial, Inc. VIRT has an Earnings ESP of +41.57% and a Zacks Rank #1. The company is slated to release first-quarter 2020 earnings on May 7.
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