Ford Motor Co. is slated to report second-quarter earnings after the bell on Thursday, and the Detroit automaker has a tough act to follow: both Tesla Inc.
TSLA,
-0.35%
and General Motors Co. have reported quarterly earnings comfortably above investors’ estimates.
Moreover, GM
GM,
+0.98%
raised its 2023 outlook for the second time this year, so a “beat and raise” bar “is quite high” for Ford
F,
+0.66%,
Evercore ISI analysts said in a note Wednesday.
Ford, like many automakers, has benefited from ongoing new-vehicle demand and on its most profitable models, said iSeeCars.com analyst Karl Brauer.
But macroeconomic factors, including inflation, interest rates, and employment numbers, “are setting up to constrict consumer buying over the next few quarters,” Brauer said.
“Watch for price cuts and slipping profits to be the next signs of shifts in the economy,” he said.
Here’s what to expect
Earnings: Analysts polled by FactSet expect Ford to report GAAP earnings of 50 cents a share in the second quarter, which would compare with 16 cents a share in the second quarter of 2022. Adjusted earnings are seen at 54 cents a share.
Estimize, which gathers estimates from buy-side analysts, fund managers, academics, and others, calls for adjusted earnings of 62 cents a share for the quarter.
Revenue: The analysts surveyed by FactSet forecast revenue of $43.2 billion for Ford, which would be up 7% from $40.2 billion in the year-ago quarter. Estimize’s revenue expectations are at $43.17 billion
Share movement: The stock has underperformed the broader market slightly, up 17% so far this year versus an advance of about 19% for the S&P 500 index
SPX,
-0.02%.
Things look a little bit better in the last three months, with Ford stock up 18%, compared with a 12% gain for the S&P.
What else to expect: Ford made the headlines when it announced price cuts on its electric F-150 pickup truck, so investors will be extra sensitive to any talk of more price cuts or slipping profits.
At the time, Ford portrayed the price cuts as “taking advantage” of increased plant capacity, production and cost scaling, and improving battery raw material costs to help lower the sticker price on the popular truck.
See also: Tesla, Rivian are the most shorted stocks in autos, but the trade is far from profitable
Ford could raise its outlook as GM did, as both companies have signaled that their full-year guidance would likely be “conservative” on cautions on pricing assumptions, Deutsche Bank analyst Emmanuel Rosner said in a recent note.
Indeed the second half of the year could be better than Ford is expecting, the analyst said.
Finally, don’t discount the risk of a strike just yet. Although Wall Street sees GM at much greater earnings risk from a strike than Ford and Stellantis NV
STLA,
+3.57%,
the potential for labor strife is a near-term overhang for Ford as well.
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