U.S. markets open in 1 hour 55 minutes
  • S&P Futures

    4,134.50
    -7.25 (-0.18%)
     
  • Dow Futures

    32,793.00
    +1.00 (+0.00%)
     
  • Nasdaq Futures

    13,120.50
    -62.75 (-0.48%)
     
  • Russell 2000 Futures

    1,938.50
    -2.60 (-0.13%)
     
  • Crude Oil

    91.89
    +1.13 (+1.25%)
     
  • Gold

    1,806.80
    +1.60 (+0.09%)
     
  • Silver

    20.60
    -0.01 (-0.04%)
     
  • EUR/USD

    1.0233
    +0.0039 (+0.38%)
     
  • 10-Yr Bond

    2.7650
    0.0000 (0.00%)
     
  • Vix

    21.79
    +0.64 (+3.03%)
     
  • GBP/USD

    1.2107
    +0.0025 (+0.21%)
     
  • USD/JPY

    134.9080
    -0.0650 (-0.05%)
     
  • BTC-USD

    23,375.96
    -684.38 (-2.84%)
     
  • CMC Crypto 200

    543.42
    +0.55 (+0.10%)
     
  • FTSE 100

    7,486.48
    +4.11 (+0.05%)
     
  • Nikkei 225

    27,999.96
    -249.28 (-0.88%)
     

Ford (F) Q1 Earnings to Suffer From Chip-Related Headwinds

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Ford F is slated to release first-quarter 2022 results on Apr 27, after the closing bell. The Zacks Consensus Estimate for the quarter’s revenues and earnings is pegged at $29.95 billion and 41 cents a share, respectively.

The Zacks Consensus Estimate for Ford’s first-quarter earnings per share has moved down by 2 cents in the past 30 days. The bottom-line projection calls for a year-over-year decline of 54%. The Zacks Consensus Estimate for quarterly revenues also suggests a year-over-year deterioration of 10.7%.

The U.S. auto biggie missed earnings estimates in the last reported quarter on lower-than-expected profits in North America and a pretax loss in Europe. Over the trailing four quarters, Ford surpassed earnings estimates on three occasions and missed once, with the average surprise being 179.3%. This is depicted in the graph below:

Ford Motor Company Price and EPS Surprise

Ford Motor Company Price and EPS Surprise
Ford Motor Company Price and EPS Surprise

Ford Motor Company price-eps-surprise | Ford Motor Company Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Ford for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Ford has an Earnings ESP of +7.84%. This is because the Most Accurate Estimate of 44 cents per share is pegged 3 cents higher than the Zacks Consensus Estimate.

Zacks Rank: It currently carries a Zacks Rank of 5 (Strong Sell).

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

Factors Shaping Ford’s Q1 Results

Declining vehicle sales during first-quarter 2021 due to escalating supply chain issues aggravated by the Russia-Ukraine war are likely to weigh on Ford’s upcoming results. Chip woes — aggravated by the Russia-Ukraine war — kept a lid on vehicle supply despite robust demand.

Consequently, Ford witnessed a 17% year-over-year fall in new vehicle sales in the United States during the January-March period. Sales of Ford’s trucks contracted 23%, while car and SUV sales declined 49% and 5.1%, respectively. Ford’s most profitable F-Series pickups, including the F-150 and its larger versions, recorded a year-over-year sales plunge of 31% during the first quarter and 47% in March. Consequently, the Zacks Consensus Estimate for total automotive revenues is pegged at $31.9 billion, indicating a decline from $33.6 billion recorded in first-quarter 2021.

High commodity costs, a tough labor market and logistical challenges are also likely to have played spoilsports. In its last earnings call, Ford warned that commodity inflation would limit the company’s profit levels in the near term. Massive spending in modernization — including connectivity, IT and product launches — is also expected to have dented margins. Amid lower revenues and high manufacturing and operating expenses, Ford is expected to have witnessed a decline in EBIT across various end-markets served.

The consensus mark for EBIT from North America is pegged at $2,191 million, implying a 25.7% decrease from the year-ago period. The consensus estimate for pre-tax loss in South America is $78 million, suggesting a deterioration from a $73 million loss in first-quarter 2021. For Europe, the Zacks Consensus Estimate is pegged at a pretax loss of $35.6 million. In the year-ago period, it recorded a pretax profit of $341 million.

Stocks With Favorable Combination

While an earnings beat looks uncertain for Ford, here are a few stocks in the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Allison Transmission ALSN has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.

The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.

LKQ Corp LKQ has an Earnings ESP of +0.37% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 28.

The Zacks Consensus Estimate for LKQ’s to-be-reported quarter’s earnings and revenues is pegged at 91 cents per share and $3.28 billion, respectively. Encouragingly, LKQ surpassed earnings estimates in the last four quarters, with an average of 33.9%.

Cummins, Inc. CMI has an Earnings ESP of +1.68% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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

Ford Motor Company (F) : Free Stock Analysis Report

Cummins Inc. (CMI) : Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report

LKQ Corporation (LKQ) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research