What investors should know ahead of Q4 results
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A Ford Motor Co. Maverick compact pickup truck from 2022 at the Washington Auto Show, Washington, D.C., Friday, January 21, 2022.
Bloomberg | Bloomberg | Getty Images
DETROIT – Shares of Ford MotorThe automotive industry was the most successful in terms of growth in last year’s fiscal year. soaring by about 140%The CEO Jim Farley led the restructuring effort. However, the stock is down less than 1% this year.
Investors will determine Thursday whether Ford has the potential to regain its momentum when Ford announces fourth quarter results. The Detroit automaker also provides guidance for next year.
According to Refinitiv estimates, Wall Street analysts expect Ford to post an adjusted profit of 45c per share and increase revenue by 6% from last year to $35.5billion.
Ford’s adjusted fourth-quarter EPS will be its second-highest for the year. supply of semiconductor chipsThese were scarce throughout the year. Due to the shortage of chips, Ford and other automakers had to close down plants periodically and reduce vehicle inventories.
Investors will monitor Ford’s quarterly results but are more concerned about the guidance of this automaker for next year, as well as any setbacks or progress. Farley’s Ford+ turnaround plan.
These issues are just a few of the many things that investors need to know before Ford releases its fourth quarter results on Thursday.
Outlook
Wall Street, as with other automakers will place a lot of emphasis on Ford’s 2020 guidance.
Automobile manufacturers continue to deal with the shortages of semiconductor chips worldwide. Some experts do not expect that levels to recover until later in this year or 2023.
Ford’s Crosstown Rival General MotorsWall Street surprised by Ford’s announcement that its global production will increase 25% to 30% by 2022 over the previous year. In October, Ford said it expected an increase in wholesale volumes, which are closely correlated with production, of just 10% in 2022.
Ford began pre-production at its new Dearborn plant for the electric F-150 Lightning pickup trucks.
Michael Wayland | CNBC
GM reported full-year adjusted earnings of $14.3 billion, or $7.07 earnings per share, on revenue of $127 billion in 2021.
According to Refinitiv, analysts expect Ford to earn $1.54-2.35 per share this year on $147.5 billion in revenue. Refinitiv estimates that Ford will earn between $1.54 and $2.35 earnings per share on revenue of $147.5 billion. This is in comparison to expectations for revenues of $126.3 million and $1.72 and 2.05 EPS.
Rivian
Ford revealed several financing changes and special items last month that could affect earnings in the fourth quarter.
Ford’s equity investments saw a significant fourth quarter gain of $8.2Billion. This was the most noteworthy item. EV start-up Rivian went public.
A $900 million profit from Rivian’s equity investment was also reclassified by the company to a special item, which will have an impact on full-year adjusted earnings guidance. It used to be between $10.5 and $11.5 Billion. This gain would have a net effect of $9.6 billion-10.6 billion on the 2021 guidance.
Rivian’s shares are owned by Ford, which is about 12%. In July, Ford also purchased $415 million worth of convertible notes from Rivian. These will become common stock by June 2022.
Ford hasn’t announced any plans to sell Rivian. Wall Street is closely monitoring this matter.
There’s no more upside
Many analysts had downgraded the stock before the earnings report.
Joseph Spak of RBC Capital Markets said the share price would face “more challenges” after last year’s significant uptake. Spak downgraded RBC Capital Markets stock from outperform on January 14 to sector perform.
Philippe Houchois, a Jefferies analyst, also downgraded this stock mid-January and made similar remarks.
Ford has strong earnings and a restructured balance sheet. In an investor note Houchois stated that shares have been rerated on earnings recovered that are approaching cyclical highs. He also added that “all this leaves little room for positive surprises.”
Ford’s price target is $22.62 per share and Ford is considered overweight, according to Factset analyst ratings.
EVs
Ford’s EV plans may surprise some investors by 2022.
Ford’s spending is reported to have increased by an additional $10 billion to $20 billionIn the coming five- to ten years factories will convert to electric-vehicle manufacturing from producing gasoline-powered automobiles. Bloomberg NewsOn Tuesday, I wrote.
An additional $10 billion to $20billion in spending over the next decade would not be unreasonable, considering that global automakers have committed billions of dollar for these efforts by 2025.
Place an order at the bank
Wall Street’s attention is shifting to Ford’s vehicle orders bank. It was at 139.454 orders in October, when Ford reported third quarter earnings. An official from Ford told CNBC that the number does not include its Bronco SUV. This is a popular vehicle, and it’s in the thousands.
2022 Ford Bronco Raptor
Ford
Farley indicated that Farley’s company is moving more towards an order-based model rather than the traditional purchasing process where dealers had large inventories and customers could choose the vehicle they wanted to drive.
Farley said that Ford profits are higher, the costs are lower and the customers receive the car they want.
— CNBC’s Michael Bloom contributed to this report.
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