U.S. Markets close in 5 hrs 34 mins

Ford (F) to Post Q1 Earnings: What to Expect for the Stock

Zacks Equity Research

Ford Motor Company F is set to report first-quarter 2019 results on Apr 25, after the market closes. In the last reported quarter, the company’s earnings matched estimates. Over the trailing four quarters, the automaker’s earnings surpassed estimates once, missed the same twice and were in line with the mark on another count. The average negative surprise came in at 3.8%.

Over the past three months, shares of Ford have dipped 2.5% against the industry’s increase of 15.4%.

Let’s see how things have shaped up for the upcoming announcement.

Ford Motor Company Price and EPS Surprise

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

Factors Influencing the First Quarter

The U.S.-based auto manufacturer ended the first quarter with a year-over-year plunge in vehicle sales. During the quarter under review, Ford’s total sales slipped 1.6%. This is likely to leave an adverse impact on first-quarter 2019 results. The company’s retail sales slumped while fleet sales improved, both in sync with the auto industry. Nevertheless, increase in the transaction price per vehicle is likely to drive Ford’s top line in the first quarter.

Further, Ford announced two huge vehicle recalls across the globe in the first quarter. The first recall was in January that involved around one million vehicles to replace Takata airbags. In February, Ford recalled roughly 1.5 million F-150 pickups in North America over transmission issues. This is likely to hamper the upcoming quarterly results.

Key Highlights

The U.S. automaker has initiated business restructuring in order to recover from the waning profits in the European business. During the first quarter, it announced laying off its workforce in Germany and the U.K., close manufacturing hubs in Russia and cease the production of loss-making vehicles in Europe.

Apart from softening demand in China and the loss-making European operations, Ford is also witnessing profits being depleted due to mounting costs. With an aim to decrease expenses, the company announced its partnership with Volkswagen AG. Per this alliance, both companies will build commercial vans and pickups plus explore electric and autonomous technological developments.

For the soon-to-be-reported quarter, the Zacks Consensus Estimate for the company’s net sales from the markets in North America, the Asia-Pacific and Europe is pegged at $24.7 billion, $3.1 billion and $8.5 billion, respectively.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Ford this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Ford has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 26 cents.

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, which increases the predictive power of ESP. However, the 0.00% ESP in the combination makes surprise prediction difficult for the stock this earnings season.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering as these comprise the right mix of elements to deliver an earnings beat this time around:

BorgWarner Inc. BWA has an Earnings ESP of +3.49% and a Zacks Rank of 3. Its first-quarter 2019 results are set to be reported on Apr 25.

You can see the complete list of today’s Zacks #1 Rank stocks here.

General Motors Company GM has an Earnings ESP of +5.61% and is a #3 Ranked player. Its first-quarter 2019 results are slated to be released on Apr 30.

Cummins Inc. CMI has an Earnings ESP of +2.02% and is a Zacks #3 Ranked player. Its first-quarter 2019 results are scheduled to be announced on Apr 30.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Motors Company (GM) : Free Stock Analysis Report
Ford Motor Company (F) : Free Stock Analysis Report
BorgWarner Inc. (BWA) : Free Stock Analysis Report
Cummins Inc. (CMI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research