Ford Motor Co. is set to release its second-quarter earnings after the bell on Thursday, following impressive earnings reports from both Tesla Inc. and General Motors Co. this quarter.
General Motors, having already increased its outlook for 2023 earlier this year, has set a high bar for Ford to surpass in terms of earnings performance. Experts at Evercore ISI noted that the expectations for Ford are quite high due to this “beat and raise” standard set by GM.
Analyst Karl Brauer from iSeeCars.com acknowledges that Ford, like other automakers, has profited from sustained demand for new vehicles, particularly its most profitable models.
However, Brauer warns of macroeconomic factors, such as inflation, interest rates, and employment figures, which could potentially hinder consumer purchasing power in the coming months. He predicts that if these factors continue to tighten, it may result in price cuts and declining profits, serving as indicators of an economic shift.
What to Expect:
Earnings: According to analysts surveyed by FactSet, the expected GAAP earnings for Ford in the second quarter are 50 cents a share, a significant increase compared to 16 cents a share in the second quarter of 2022. Adjusted earnings are anticipated to be around 54 cents a share. Estimize gathers estimates from various sources and suggests adjusted earnings of 62 cents a share for the quarter.
Revenue: FactSet’s survey of analysts projects revenue of $43.2 billion for Ford in the second quarter, showing a 7% increase from $40.2 billion in the same period last year. Estimize’s revenue expectations align closely with this projection at $43.17 billion.
The stock of Ford has slightly underperformed the broader market this year, with a 17% increase compared to a 19% advance for the S&P 500 index. However, in the last three months, Ford stock has shown better performance, rising by 18% compared to a 12% gain for the S&P.
What to Expect
Investors will be closely watching for any news regarding price cuts or slipping profits from Ford. The company recently made headlines by announcing price cuts on its electric F-150 pickup truck. This move was presented as a way to take advantage of increased plant capacity, production, and cost scaling, as well as improving battery raw material costs to lower the sticker price.
Following in the footsteps of GM, Ford might raise its outlook for the year. Both companies have indicated that their full-year guidance is likely to be conservative due to cautious pricing assumptions. Analyst Emmanuel Rosner from Deutsche Bank suggests that the second half of the year could exceed Ford’s expectations.
Labor Strife Risk
There is also a potential risk of a strike that investors should not overlook. While Wall Street believes that GM faces a greater earnings risk from a strike, Ford and Stellantis NV are not immune to labor strife in the near term.
Make sure not to miss Carvana’s impressive recovery. Check out this chart showcasing the company’s meteoric surge.