Ford's [F] share price might be up just 1.3% over the past 12 months, but in that time the share price has seen plenty of price action. Trade wars, revised guidance and weak sales in China have all seen volatility in the stock.
In October, Ford's share price dropped 2.5% in after-market trading as Q3 earnings saw full-year guidance lowered. But will Q4 earnings help rev Ford's share price back into life? Or will international sales continue to weigh on the share price?
When are Ford reporting Q4 earnings?
What happened in Ford's Q3 earnings?
Last quarter strong sales in North America saw earnings per share come in at $0.34, against a predicted $0.20. Automotive revenue of $33.93 billion was close to Wall Street's forecasted $33.98 billion.
In Q3 Ford experienced strong sales in Europe, particularly in Germany - up 21.1% year on year. Yet, consumer confidence in China - Ford's second-biggest market - weakened. Wholesale unit volumes in the country came in at 77,443 units - a 37.7% year on year decline.
Shares veered off course when Ford lowered its full-year guidance to between $6.5 billion and $7 billion. It had been between $7 billion and $7.5 billion.
What to look out for in Ford's Q4 earnings?
China sales weigh on earnings
In 2016, Ford managed to shift 1.26 million vehicles in China. Since then, it has experienced double-digit declines in sales. Last year, according to Reuters, a mere 567,854 Chinese motorists bought Ford vehicles.
So why are so many vehicles still on showroom floors up and down the middle kingdom? Well, the recent trade war with the US hasn't helped. Then there's the decline in the Chinese motor sector that has hurt sales across the board.
Ford claimed in December that 2019 losses were 50% lower than 2018. Shareholders will find out how accurate that claim is when Q4 numbers come out. Any discrepancy will have a bearing on share price volatility.
Electric vehicle update
Ford has announced it will pump $11.5 billion into manufacturing electric vehicles. Rolling off the production line will be electric Mustangs and pick up trucks. Ford will also be building its first electric Lincoln in a partnership with Rivian. Lincoln is Ford's luxury brand and it has put $500 million towards the project.
Electric vehicle sales could be a huge growth driver for Ford. And it's not being shy about promoting its line up of EV cars. At Sunday's Super Bowl Ford showcased the Mustang Mach-e SUV in a television ad starring Idris Elba.
On Mach-E Club forum, speculation is that the Ford Mach-e Mustang has received 32,000 pre-orders. That represents two-thirds of first-year production. Any news on Ford's EV plans during the earnings call could help investors buy into the stock.
|PE ratio (TTM)||22.92|
|Quarterly Revenue Growth (YoY)||-1.80%|
Ford share price vitals, Yahoo Finance, 04 February 2020
What to expect in Ford’s Q4 earnings?
Ford has history beating earnings expectations. Three out of the past four earnings have topped analyst forecasts
Wall Street is expecting earnings per share to come in at $0.15, down from $0.3 seen in the same quarter last year. Revenue is forecast at $36.49 billion, down 5.8%.
Zacks Consensus Estimate for North American revenues is $24,018 million, down from the $25,800 million seen a year ago. Forecasts for Europe are $6,937 million, against last year's $7,400 million. And in China, expectations are for $1,891 million, down 47% from the same quarter last year.
Of the 24 analysts covering the stock on Yahoo Finance, the majority rate Ford a Hold. Only four rate it a Buy, while there are two Sell ratings. Ford carries an average $10.09 12-month price target. Hitting this would represent a 14% upside on the current share price.