Can Ford's (F) North America Unit Give Its Q2 Earnings a Boost?
Ford’s F North America market — which accounts for the bulk of automotive revenues — is likely to have aided second-quarter 2022 earnings. The U.S. auto giant is set to release quarterly results on Jul 27, after the closing bell.
(Also read: Will Ford Q2 Earnings be a Pleasant Surprise for Investors?)
Q1 Highlights of Ford’s North America Market
In the last reported quarter, wholesale unit volumes in the North American segment decreased 4% from the year-earlier period to 514,000 units. Revenues in the North American segment fell 3% year on year to $22.3 billion. Consequently, EBIT totaled $1,591 million, lower than the $2,949 million recorded in the corresponding quarter of 2021. Chip deficit, high commodity prices, a tight labor market and logistical challenges resulted in the underperformance.
How Do Things Stand This Time Around?
While most of the other auto giants reported a sales decline in second-quarter 2022, Ford was a clear outlier and bucked the trend of ebbing vehicle sales in the quarter under discussion. The company sold 483,688 units in the United States, edging up 1.8% year over year. Sales volumes also grew from 432,132 units delivered during first-quarter 2022. Robust demand for the F-Series truck lineup, Explorer and Expedition SUVs and the battery-electric vehicles (BEV) gave a boost to sales.
Ford outperformed the industry in June, with sales volumes up 31.5% year over year and offsetting the declines in May and April. In June, sales of F-Series were up 26.3% year over year and comprised 37.9% of the company's overall sales mix.Pickup truck sales—including F-Series, Ranger and Maverick— were up 26.3% from a year ago. Sales of America’s hot-selling commercial van, the Ford Transit, surged 73.6% on a year-over-year basis in June.
Ford’s EV sales in June reached 4,353 units, a sharp increase of 76.6% from a year ago. The company was only second to Tesla in US EV sales in June. Sales of the all-electric F-150 Lightning reached 1,837 units. A total of 2,296 units of the F-Lightning has been sold since it was launched, clinching the pole position in the segment during June.
The Zacks Consensus Estimate for wholesale volumes in North America is pegged at 542,000 units, implying an increase from 327,000 units in the year-ago period. The volumes also compared favorably with 514,000 units in first-quarter 2022. Additionally, rising vehicle prices amid the demand supply mismatch are expected to buoy results. Average transaction price per vehicle rose $1,900 month on month in June, driving the average prices of Ford and Lincoln vehicles to $52,200.
Consequently, the consensus mark for revenues from North America is $23.4 billion, implying an uptick of 56% and 4.9%, on a yearly and sequential basis, respectively. The consensus mark for EBIT from the region is pegged at $1,876 million, suggesting massive improvement from $194 million in the year-ago period. The metric also compares favorably with $1,591 million recorded in first-quarter 2022.
Ford’s Overall Earnings & Revenue Projections for Q2
The Zacks Consensus Estimate for Ford’s second-quarter earnings and revenues is pegged at 43 cents a share and $32.74 billion, respectively.
Investors should note that our proven model does not conclusively predict an earnings beat for Ford this season. The 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. That is not the case here. Ford currently has an Earnings ESP of +3.69% and carries a Zacks Rank #4 (Sell).
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Stocks With the Favorable Combination
Here are a few other stocks in the auto sector lined up to release quarterly results soon. Encouragingly, our model predicts an earnings beat for these stocks:
Oshkosh Corporation OSK has an Earnings ESP of +8.67% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Jul 28.
The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at 93 cents per share and $2.2 billion, respectively. Over the trailing four quarters, OSK surpassed earnings estimates twice for as many misses, with the average negative surprise being 1.21%.
Magna International MGA has an Earnings ESP of +5.82% and a Zacks Rank #3. The company is slated to release second-quarter results on Jul 29.
The Zacks Consensus Estimate for Magna’s to-be-reported quarter’s earnings and revenues is pegged at 95 cents per share and $8.77 billion, respectively. Over the trailing four quarters, MGA surpassed earnings estimates twice for as many misses, with the average being 12.6%.
Lear Corporation LEA has an Earnings ESP of +6.93% and a Zacks Rank #3. The company is set to post second-quarter results on Aug 2.
The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $1.18 per share and $4.75 billion, respectively. LEA surpassed earnings estimates in three of the last four quarters and missed once, with the average being 6.53%.
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Ford Motor Company (F) : Free Stock Analysis Report
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