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Will the Best-Seller Truck Drive Ford's (F) Q4 Earnings?

Zacks Equity Research

Ford Motor Company F is scheduled to announce fourth-quarter and 2018 results on Jan 23, after the market closes. In the last reported quarter, its bottom line was in line with the Zacks Consensus Estimate while automotive revenues missed the same.

In the past three months, shares of Ford have underperformed the industry it belongs to. During the period, the stock has gained 2% in comparison with the industry’s increase of 12.4%. Over the past seven days, the Zacks Consensus Estimate for Ford’s earnings in 2018 has moved 0.7% downward.

In recent times, rising demand for spacious and comfortable vehicles led to augmented truck, crossover and SUV sales. In fact, this continued shift can be witnessed from Ford’s three quarterly sales of 2018. During these quarters, the company’s automotive revenues were majorly driven by growing truck and SUV demand, majorly offset by waning traditional sedan sales. Among the top players, a few models of Ford that deserve mention are F-Series, Ford Expedition and Lincoln Navigator.

Ford Motor Company Price and EPS Surprise

 

Ford Motor Company Price and EPS Surprise | Ford Motor Company Quote

In 2018, Ford’s F-Series maintained its position of being the best-selling pickup in America for the 42nd year in a row. Light-weight and sturdy vehicles in the lineup are decent options to choose from a variety of pick-up trucks available in the market. In fact, immense demand aided the automaker to sell nearly 1.1 million F-Series vehicles globally in the last year compared with its target of 1 million. Further, considering the U.S. average transaction price of $46,700 on these vehicles, Ford is expected to generate $50 billion in revenues by selling more than 1 million pickups.

Despite such high annual sales of F-Series trucks, the company’s truck segment reported a sales decline in the last three months of 2018. In October, November and December, the segment’s sales fell 4.9%, 2.3% and 3.8%, respectively. With most of the company’s sales depending on its pickup line, a continuous decline in monthly sales recorded by the truck segment is a concern for Ford.

In the preliminary report, the automaker anticipates revenues of $41.8 billion and adjusted earnings of 30 cents per share for fourth-quarter 2018. For the quarter under review, the Zacks Consensus Estimate for Ford’s automotive revenues is pegged at $37.6 billion. (For details refer- Ford Set to Report Q4 Earnings: What's in the Offing?)

Frequent vehicle recalls to fix Takata airbags or other faulty vehicle parts are elevating expenses for Ford. Further, high import costs on steel and aluminum, along with weakening demand in China and stressed business in Europe, are expected to majorly hamper the company’s bottom line in fourth-quarter 2018.

Earnings Schedules of Other Major Auto Companies

Among other automotive companies, General Motors Company GM is scheduled to release results on Feb 6, whereas Genuine Parts Company GPC and Magna International Inc. MGA are expected to report earnings on Feb 19 and Feb 28, respectively.

General Motors currently sports a Zacks Rank #1 (Strong Buy) while Genuine Parts and Magna carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for General Motors, Genuine Parts and Magna are 8.5%, 5% and 8.5%, respectively.

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