Why Is Ford Motor Company (F) Down 10.3% Since Last Earnings Report?

It has been about a month since the last earnings report for Ford Motor Company (F). Shares have lost about 10.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Ford Motor Company due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Ford Q1 Earnings Miss Estimates

Ford reported adjusted earnings of 38 cents per share in first-quarter 2022, missing the Zacks Consensus Estimate of 39 cents. Lower-than-expected profits in North America and a wider-than-expected pretax loss in China led to this underperformance.  The bottom line compares unfavorably with the year-ago quarter’s earnings of 89 cents. The company’s consolidated first-quarter revenues came in at $34.5 billion, down 4.9% year over year.

Segmental Performance

In the first quarter, the total wholesale volume in the Ford Automotive segment fell 9% year over year to 966,000 units. Revenues from the segment declined 4% to $32.1 billion but outpaced the Zacks Consensus estimate of $30.3 billion. Earnings before interest and taxes came in at $1,891 million against the year-ago loss of $1,506 million.

In North America, revenues fell 3% year over year to $22.3 billion in the reported quarter. The wholesale volume declined 4% to 514,000 units. EBIT totaled $1,591 million, lower than $2,949 million in the corresponding quarter of 2021. The figure also lagged the consensus mark of $2,191.

In South America, revenues moved up 33% year over year to $0.6 billion in the quarter. Wholesale volume plunged 14% to 15,000 units. The unit’s pretax earnings increased to $50 million from a loss of $73 million reported in the prior-year quarter amid cost-cut and rejig efforts. The consensus mark was pegged at a loss of $78 million.

In Europe, revenues declined 2% year over year to $6.9 billion in the quarter. Wholesale volume slid 9% to 254,000 units. Pretax earnings for the segment totaled $207 million, falling from $341 million, but the reported EBIT beat the consensus mark of a loss of $35.6 million.

In China, revenues plummeted 32% year over year to $0.6 billion in the reported quarter. Wholesale volume dipped 15% to 128,000 units. Moreover, the pretax loss widened from the prior year’s loss of $15 million to $53 million. The metric was also wider than the consensus mark of a loss of $49.6 million.

In the International Markets Group, revenues were down 23% from the year-ago figure to $1.7 billion. Wholesale volume slid 33% to 55,000 units and pretax earnings totaled $96 million, falling from $201 million reported in the year-ago period. The figure lagged the consensus metric of $129 million.

First-quarter revenues from the Ford Credit unit came in at $2,281 million, lower than the year-ago revenues of $2,663 million and missing the Zacks Consensus Estimate of $2,636 million. Pretax earnings totaled $928 million, beating the consensus mark of $837 million.

Revenues from Ford Mobility came in at $84 million, surging from the year-earlier level of $11 million.

Financial Position

Ford reported a negative adjusted free cash flow (FCF) of $580 million during the quarter. It had cash and cash equivalents of $10,579 million as of Mar 31, 2022, compared with $10,963 million on Dec 31, 2021. The automotive long-term debt decreased to $17,158 million from $17,200 million as of the end of 2021.

Guidance

Ford’s 2022 projections remain unchanged. Adjusted EBIT for 2022 is between $11.5 billion and $12.5 billion, implying an uptick of 15-25% from the 2021 level. Moreover, 2022 vehicle wholesale volumes are anticipated to jump 10% to 15%. Adjusted FCF is envisioned in the range of $5.5-6.5 billion for 2022, suggesting a jump from $4.6 billion recorded in 2021.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -7.57% due to these changes.

VGM Scores

At this time, Ford Motor Company has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Ford Motor Company has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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