U.S. Markets open in 5 hrs 38 mins

Ford Motor Company Earnings: What to Watch

John Rosevear, The Motley Fool

Ford Motor Company (NYSE: F) will report its first-quarter 2019 earnings after the U.S. markets close on Thursday, April 25. Here's a look at what to expect.

What Wall Street expects

Wall Street analysts polled by Thomson Reuters expect Ford to report adjusted earnings of $0.26 per share, on average, down from $0.43 per share in the first quarter of 2018. They expect revenue in Ford's automotive segment to total $37.05 billion, down 5% from just over $39 billion in the year-ago period. 

A black 2019 Ford F-150 Limited, an upscale full-size pickup truck.

Sales of Ford's all-important F-Series pickups rose just 0.2% in the first quarter, but average transactions prices were strong. Image source: Ford Motor Company.

Ford's first-quarter sales: A mixed bag

Ford's sales were down year over year in its 3 most-important global markets, but the effect on earnings might not be as bad as that sounds. 

  • Ford's U.S. sales fell 1.6% in the first quarter versus the year-ago period. But while total sales were down, the underlying numbers suggest that profits could be strong: Sales of Ford's trucks and SUVs rose 4.1% and 5%, respectively, while sales of car models fell 23.7%. The average transaction price for Ford's F-Series lineup hit $47,454 in the quarter, a very strong number that bodes well for profitability in North America.
  • Ford's sales in Europe fell 6.2% in the first quarter, but again a deeper look presents a somewhat better picture. Sales of Ford's "passenger vehicles" -- cars and SUVs -- were down 11.2% from a year ago on weak results for the Fiesta, the Mondeo sedan, and the outgoing Kuga crossover SUV. (The Mondeo and Kuga are near-twins of the U.S.-market Fusion and Escape, respectively.) But sales of Ford's commercial vehicles, including the Transit van lineup and the Ranger pickup, rose 9.3% from the first quarter of 2018. The upshot could be an improvement in profitability here as well.
  • Ford's sales in China fell 48.4% from the first quarter of 2018. There are no bright spots here: A big overhaul of Ford's China operation is underway, but things are pretty grim right now. 

Restructuring costs are adding up 

Ford announced two sets of moves in the quarter related to its ongoing global restructuring effort. The company said that both will generate one-time charges in 2019, but it's not clear how (or whether) those charges will affect first-quarter results. 

In February, Ford said that it will close a truck factory in Brazil and end sales of its heavy trucks in South America. It said the moves will generate about $460 million in one-time charges, including about $100 million in noncash accounting charges that might be recorded against first-quarter results. 

Ford also announced a major restructuring of its Russian operations in March. It plans to stop selling passenger vehicles in the country, and it is restructuring its joint venture with Russian automaker Sollers PJSC to focus on commercial vehicles. Ford said that these actions will lead to one-time charges totaling $400 million to $500 million, most by the end of 2019. 

The upshot: An upside earnings surprise isn't likely

Ford has often managed to beat Wall Street's earnings estimate by a penny or two in the past. That might happen again this time around. But investors hoping for a bigger upside surprise are likely to be disappointed, given the sales declines around the world.

At some point, possibly before the end of 2019, Ford's ongoing restructuring efforts will begin to boost the company's bottom line. It's probably too early for that now, but we might get a clearer understanding of when things will turn around during Ford's earnings call on Thursday. If so, the stock might rally despite the likely profit decline. 

More From The Motley Fool

John Rosevear owns shares of Ford. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.