Ford's (F) Q3 Earnings to Get a Boost From Blue and Pro Segments
Ford F is set to release its third-quarter 2023 results on Oct 26, after the closing bell. The focal point of the auto giant’s earnings release will be its global wholesale volumes from the Ford Blue and Ford Pro segments.
(Also Read: Ford Lines Up for Q3 Earnings: A Peek at Key Predictions)
Q2 Highlights
Ford reported adjusted earnings of 72 cents per share for second-quarter 2023, which beat the Zacks Consensus Estimate of 51 cents and increased from 68 cents recorded in the year-ago quarter. Higher-than-expected automotive revenues resulted in the outperformance. The company’s consolidated second-quarter revenues came in at $44,954 million, rising 11.8% year over year.
In the second quarter, total wholesale volume in the Ford Blue and Ford Pro segments increased 7% year over year to 720,000 units and 8% year over year to 365,000, respectively. EBIT from Ford Blue and Pro units came in at $2,308 million and $2,391 million, respectively.
Ford reported adjusted free cash flow (FCF) of $2,919 million during the quarter. It had cash and cash equivalents of $26,406 million as of Jun 30, 2023. Long-term debt, excluding Ford Credit, totaled $19.17 billion at the end of the second quarter of 2023.
Factors at Play
While Ford Blue focuses on the firm’s legacy gas-powered business, Ford Pro deals with commercial vehicles and services. Expected higher year-over-year growth in global wholesale shipments and adjusted EBIT from these segments are likely to have positively impacted Ford’s upcoming results.
Our estimate for global wholesale shipments from Ford Blue and Ford Pro segments is pegged at 750,000 and 382,000 units, suggesting a year-over-year uptick of 1.2% and 19%, respectively. Our forecast for third-quarter Ford Blue and Ford Pro adjusted EBIT implies an uptick of 6.2% and a whopping 370.1% on a year-over-year basis.
The combination of Ford Pro's strong order books and the successful launch of the all-new Super Duty set the stage for promising results for the Ford Pro segment. In the quarter under discussion, Ford's commercial vans, led by the Transit van, continued to perform strongly. Transit van sales surged by 28.3%, with 34,006 vans sold, maintaining its position as America's top-selling commercial van. Ford E-Series vans also saw a 13.4% increase in the third quarter. Ford held the top spot in commercial sales, with a 40.5% market share, up 2.1% from the previous year. The Ford Pro segment is expected to have benefited from high demand for E-Transit vans. In the third quarter, the California Vanpool Authority (CalVans) announced the purchase of over 400 new Ford E-Transit vans through Model 1, a leading electric school bus distributor, expanding its fleet by 40% and reducing its fuel and CO2 emissions in California.
Ford Blue segment is set to reflect benefits from high ICE-powered vehicles, which rose 5.4% year over year to 444,681 units in the third quarter of 2023. Notably, the 2024 Ford Mustang debuted in August and for the third quarter, it recorded 9,844 sales, with the first full month of sales occurring in September. Notably, 67% of the Mustang's third-quarter sales, equating to 6,575 units, were realized in September.
Overall Earnings & Revenue Projections
Our proven model predicts an earnings beat for Ford as it has the right combination of a positive Earnings ESP and a favorable Zacks Rank. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company has an Earnings ESP of +14.57% as the Most Accurate Estimate is pegged 6 cents higher than the Zacks Consensus Estimate. F currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 40 cents per share, indicating a growth 33.3% on a year-over-year basis. The consensus mark has moved north by 6 cents a share over the past 90 days. The Zacks Consensus Estimate of $38.21 billion for automotive sales indicates a 2.74% rise on a year-over-year basis.
Other Stocks With the Favorable Combination
Here are a few other players from the auto space that, according to our model, also have the right elements to post an earnings beat this time.
Oshkosh Corp OSK will release third-quarter 2023 results on Oct 26. The company has an Earnings ESP of +8.24% and a Zacks Rank #3.
The Zacks Consensus Estimate for OSK’s to-be-reported quarter’s earnings and revenues is pegged at $2.18 per share and $2.46 billion, respectively. Oshkosh surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being 27.45%.
Lear Corp. LEA will release third-quarter 2023 results on Oct 26. The company has an Earnings ESP of +2.63% and a Zacks Rank #3.
The Zacks Consensus Estimate for LEA’s to-be-reported quarter’s earnings and revenues is pegged at $2.56 per share and $5.48 billion, respectively. Lear surpassed earnings estimates in the trailing four quarters, with the average surprise being 8.07%.
Cummins CMI is expected to report third-quarter 2023 results on Nov 2. The company has an Earnings ESP of +0.48% and a Zacks Rank #3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.70 per share and $8.19 billion, respectively. CMI missed earnings estimates in three of the trailing four quarters and surpassed once, with the average negative surprise being 5.51%.
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