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Ford's (F) Earnings Surpass Estimates in Q2, Improve Y/Y

Zacks Equity Research

Ford Motor Company F delivered second-quarter 2019 adjusted earnings per share (EPS) of 32 cents, which beat the Zacks Consensus Estimate of 30 cents. In the prior-year quarter, adjusted earnings were 27 cents per share.

In the second quarter, the company reported adjusted earnings before interest and taxes (EBIT) of $1.7 billion and adjusted EBIT margin of 4.3%, both flat year over year. Excluding the Pivotal Software revaluation, adjusted EBIT would have amounted to $1.8 billion.

During the reported quarter, Ford generated automotive revenues of $35.8 billion. The figure surpassed the Zacks Consensus Estimate of $34.5 billion. In the prior-year quarter, the figure amounted to $35.9 billion.
 

Ford Motor Company Price, Consensus and EPS Surprise

 

Ford Motor Company Price, Consensus and EPS Surprise

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

 

Ford Automotive

During the reported quarter, wholesale volume in the Ford Automotive segment declined 129,000 units to 1.36 million. EBIT rose 19% to $1.4 billion. The figure was driven by improvement in mix and net pricing, especially North America’s franchise strengths in trucks and sport-utility vehicles.

In North America, revenues inched up 1% year over year to $24 billion during the reported quarter. Wholesale volume declined 7% to 693,000 units. Further, EBIT was $1.7 billion, marking fall of $57 million from the year-ago quarter.

In South America, revenues declined 33% year over year to $1 billion. Wholesale volume declined 22% to 75,000 units.

In Europe, revenues fell 1% to $7.6 billion. Wholesale volume increased 3% to around 379,000 units. EBIT amounted $53 million, marking an increase of $126 million from the first quarter of 2018.

In the Middle East & Africa segment, revenues were $0.6 billion. Further, wholesale volume declined 22% to 21,000 units. The region recorded a negative EBIT of $45 million.

In the Asia Pacific region, excluding China, revenues fell 1% to $1.8 billion. Wholesale volume declined 9% to 70,000 units. Further, the region recorded an EBIT of $30 million.

In China, revenues surged 48% year over year to $0.9 billion. Further, wholesale volume declined 32% to $126,000 units.

Financial Position

Ford had cash and cash equivalents of $12.6 billion as of Jun 30, 2019 compared with $9.6 billion as of Dec 31, 2018.

2019 Outlook

Ford expects adjusted EBIT in the range of $7-$7.5 billion compared with $7 billion in 2018. The range indicates additional strength in market factors and improved costs.

Adjusted EPS is anticipated in the range of $1.20-$1.35 compared with $1.30 a year ago. The range assumes a full-year adjusted effective tax rate in the band of 18-20%, which indicates a rise of 10% from year-ago levels. This is likely to create a headwind of 12-16 cents per share in 2019.

Zacks Rank & Stocks to Consider

Ford currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc. AAP. While Copart sports a Zacks Rank #1 (Strong Buy), CarMax and Advance Auto Parts carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Copart has an expected long-term growth rate of 20%. In the past six months, shares of the company have moved up 59.3%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have rallied 47.9%.

Advance Auto Parts has an expected long-term growth rate of 11.6%. In the past six months, shares of the company have increased 2.3%.

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