|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's range||10.78 - 11.03|
|52-week range||10.14 - 13.48|
|PE ratio (TTM)||5.69|
|Earnings date||25 Apr 2018|
|Forward dividend & yield||0.60 (5.27%)|
|1y target est||12.39|
According to Reuters, of the 24 analysts covering Fiat Chrysler (FCAU) on April 18, 2018, 46% recommended “buy,” 42% recommended “hold,” and 12% recommended “sell.” As of April 18, Fiat Chrysler had a market capitalization of ~$24 billion, which was much lower than General Motors‘ (GM), Ford‘s (F), and Tesla’s (TSLA) market caps of $53 billion, $43 billion, and $50 billion, respectively. Analysts’ 12-month target price for Fiat Chrysler was $32.43, ~33.5% higher than its market price of $24.29.
Previously in this series, we learned that Fiat Chrysler (FCAU) stock has outperformed peers and the broader market in 2018 so far. Investors’ high expectations for the company’s 1Q18 earnings could be another reason for its strong Wall Street performance. In this part, we’ll explore analysts’ estimates for its 1Q18 earnings and review its earnings in 4Q17.
Italian-American auto giant Fiat Chrysler (FCAU) is scheduled to release its 1Q18 earnings on April 26. According to 2017 auto sales volumes, FCAU maintained its position as the fourth-largest US automaker after General Motors (GM), Ford (F), and Toyota (TM). Let’s look at its stock performance in April so far.
On April 17, 2018, Ford (F) stock was trading at $11.38. Since posting a 52-week low of $10.14 on March 2, 2018, the company’s stock has recovered ~12.2%. Ford stock stayed below a downward sloping trendline for two years until September 2017, when it violated the trendline, reflecting a gradual positive shift. Let’s look at some key support and resistance areas in Ford stock ahead of its 1Q18 earnings event.
As of April 17, 2018, Ford’s (F) forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) ratio was 13.3x. The ratio, which has inched up over the last few quarters, is higher than many competitors’. General Motors’ (GM) and Fiat Chrysler’s (FCAU) forward EV-to-EBITDA ratios were 7.1x and 2.4x, respectively.
The US has imposed tariffs on several products this year. In January, President Trump slapped tariffs on washing machines and solar panel imports. In another major move, we saw tariffs imposed on steel and aluminum imports.
In February 2018, Ford gave dismal guidance for fiscal 2018, forecasting adjusted EPS (earnings per share) of $1.45–$1.70, lower than its adjusted EPS of $1.78 in 2017. Ford expects its 2018 revenue to be flat or moderately higher than its 2017 revenue, and its operating cash flow to be positive but lower than its 2017 cash flow. This guidance was based on US auto sales being expected to decline in 2018. However, as US light-vehicle sales rose 1.9% YoY (year-over-year) in 1Q18, we can’t deny the possibility of Ford revising its guidance upward.
In 4Q17, Ford (F) reported an adjusted pre-tax profit of $1.4 billion from its automotive segment, with an operating profit margin of 3.7%. This margin was smaller than its adjusted operating profit margin of 5.7% in 4Q16. Ford’s pre-tax profits worsened in all key reporting segments but South America. While its South American profits improved, they remained in negative territory. Despite positive growth in its global wholesale volumes, Ford’s pre-tax profit in 4Q17 was hurt by higher commodity prices, recall costs, and currency headwinds driven by the British pound.
In 4Q17, Ford (F) reported revenue of $38.5 billion from its automotive segment, up 7% from 4Q16 and higher than analysts’ estimate of $37 billion. Ford’s US sales rose 2% YoY (year-over-year), driving its revenue higher during the quarter. Let’s look at what analysts expect for Ford’s 1Q18 revenue.
According to Reuters, of the 24 analysts covering Ford (F) stock, most (79%) have recommended “hold,” 17% have recommended “buy,” and 4% have recommended “sell.” As of April 17, 2018, Ford’s 12-month target price was $12.39, implying an upside potential of ~8.8% based on its market price of $11.38. Its target price was $12.85 about two months ago. In the last six months, many analysts have changed their rating on Ford stock to “hold.”
Previously, we looked at how Ford (F) stock underperformed the S&P 500 in 1Q18, while Fiat Chrysler (FCAU), Ferrari (RACE), and Toyota (TM) outperformed the broader market. US auto companies Ford and General Motors (GM) faced investors’ concerns about softening US vehicle sales and trade-war fears. On the brighter side, US light vehicle sales remained firm in 1Q18, rising ~1.9% YoY (year-over-year), which could why most auto stocks are trading positively in April. Let’s look at what we can expect from Ford’s 1Q18 earnings results.
Ford (F) is set to release its 1Q18 earnings results on April 25, 2018. Ford was the second-largest US auto company by 2017 vehicle sales volume, after General Motors (GM). Before we explore what investors could expect from the company’s upcoming earnings, let’s explore how Ford stock has fared in 2018 so far.
According to Reuters, of the analysts covering AutoZone (AZO), O’Reilly Automotive (ORLY), and Advance Auto Parts (AAP) on April 11, 2018, ~44%, ~68%, and ~44% recommended “buy,” respectively, and 52%, 44%, and 32% recommended “hold.” Interestingly, 4% and 12% of analysts recommended “sell” for AZO and AAP, and there were no “sell” recommendations for O’Reilly.
Ford is getting into the non-emergency medical transportation business as it moves toward making money off its experimental ventures in new mobility. The automaker says its GoRide service is using 15 specially equipped vans to transport patients to more than 200 health care facilities in the Beaumont Health Network in the Detroit area. Ford joins Uber and Lyft in getting into medical transportation.
Equity markets, which have rallied since President Donald Trump’s election, have come under pressure this year. By slashing the corporate tax rate, President Trump provided a one-time boost to US corporations’ bottom-line results. Looking at the equity markets, stocks can rise either with an increase in earnings or with a valuation multiple expansion.
In the auto sector, valuation multiples are used by investors to compare companies that are similar in size or business. Let’s take a look at these multiples for mainstream auto companies Toyota (TM), Ford (F), General Motors (GM), and Fiat Chrysler (FCAU).
Ford is bringing its Mustang to NASCAR's top series for the first time. The American automaker said Tuesday the Mustang will replace the Fusion in the Monster Energy Cup Series beginning next February ...
According to Reuters, of the analysts covering Harley-Davidson (HOG) stock, most (71%) have recommended “hold.” Approximately 24% have recommended “buy” and 5% have maintained a bearish view, recommending “sell.” On April 11, analysts’ target price for Harley-Davidson was $49.71 for the next 12 months, reflecting an 18.2% upside potential based on its market price of $42.05. Analysts’ target price for HOG stock has fallen over the last three months, from $51.86.
According to Reuters, of the ten analysts covering Ferrari (RACE) stock, 50% have recommended “buy,” 30% have recommended “hold,” and 20% expect Ferrari stock to drop, recommending “sell.” Analysts’ 12-month target price for Ferrari stock is $138.09, reflecting an upside potential of 14.7% based on its market price of $120.43. Analysts’ target price has risen significantly over the last two months, from $132.21.
Autonomous cars continue to be a major area of focus for most automakers and Ford Motor Company (F) is the latest to jump the bandwagon.
According to Reuters, of the 21 analysts covering Honda (HMC) on April 11, 2018, ~62% recommended “buy” and 38% recommended “hold.” There were no “sell” recommendations. About ten days ago, 57% of analysts were recommending “buy.”