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Will Ford (F) Miss This Earnings Season?

Zacks Equity Research

Ford Motor Co. (F) is set to report first-quarter 2014 results on Apr 25. In the last quarter it posted a +10.71% surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

Ford is pursuing a major expansion plan in the emerging markets, primarily in Argentina, Brazil, China, India and Thailand. The company has plans to launch 15 new models in China by 2015. The popularity of the expanded product line-up boosted the automaker’s sales in China by 45% in the first quarter.

However, sales in the U.S. declined in the first 2 months of 2014, resulting in a 2.6% fall in Ford’s U.S. sales in the first quarter of 2014, despite a 3.4% increase in March. Moreover, the company’s structural costs are increasing due to higher volumes as well as expansion and improvement of its product line-up.

Further, wholesale volume in North America is expected to be lower than the 2013 figure due to production downtime associated with model changeovers. Ford is also experiencing weakness in South America due to economic problems and uncertainties in Venezuela and Argentina and weakness in the Brazilian economy.

Earnings Whispers?

Our proven model does not conclusively show that Ford is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -3.13%. That is because the Most Accurate estimate stands at 31 cents while the Zacks Consensus Estimate is higher at 32 cents.

Zacks Rank #3 (Hold): Ford’s Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Magna International Inc. (MGA), with Earnings ESP of +2.59% and a Zacks Rank #2 (Buy).

Fox Factory Holding Corp (FOXF), with Earnings ESP of +12.50% and a Zacks Rank #2.

PACCAR Inc. (PCAR), with Earnings ESP of +4.00% and a Zacks Rank #2.

Read the Full Research Report on F
Read the Full Research Report on PCAR
Read the Full Research Report on MGA
Read the Full Research Report on FOXF

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