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Ford Earnings: What to Expect
Stock Analysis & Ideas

Ford Earnings: What to Expect

Ford Motor Company (F) is an American multinational automotive manufacturer.

I am bullish on the stock. (See Analysts’ Top Stocks on TipRanks)

Guidance

Ford is expected to release its third-quarter earnings report on October 27. After beating analysts’ estimates in its second quarter, the firm upgraded its outlook.

The automotive giant anticipates volume to increase by 30% during the second half of 2021, which could see EBIT coming in between $9 billion to $10 billion.

Investors need to bear in mind that rising input costs and significant investment in EV R&D will likely offset part of Ford’s rising sales volume.

Consumer sales are probably only going to start slowing down going into 2022, as disposable income remained high during Q3.

Furthermore, the company’s EV division is picking up steam. After only starting delivery of all EVs this year, Ford’s half-year sales were already 12,975, and it’s reported that 80% of its electronic truck customers are coming from other brands.

M-Score & Earnings History

The m-score is an 8-factor algorithmic output that predicts the likelihood of a company manipulating its earnings. A good score is anything below -1.78, and Ford has a score of -3.05, which is excellent.

The only problem areas are elevated growth in current assets (as a proportion of total assets), and sales versus historical levels.

However, the reasons for these numbers are justified; Ford has stockpiled inventories by approximately 55% since January to combat a supply shortage.

As for the higher than usual sales growth, the auto company’s revenue grew by 45.1% in its previous quarter, with the reopening being the benefactor instead of aggressive accounting techniques.

Out of its last 12 reporting quarters, Ford beat revenue estimates nine times.

What This Could Mean

Ford stock has a P/E ratio (7.7) that’s 44.8% lower than its sector.

In addition, Ford has a price-sales ratio of only 0.5, and a price-cash flow ratio of 3, which suggest that the stock price is undervalued.

Wall Street’s Take

Wall Street thinks the stock is a Moderate Buy, with an average price target of $16.03. In the past three months, there have been five Buy ratings on the stock, three Holds ratings, and one Sell rating.

The average Ford price target implies 3.4% upside potential.

Concluding Thoughts

Based on the Beneish m-score and macro-economic activity, Ford is likely to live up to expectations in its upcoming earnings report.

There’s much to say about the firm’s long-term prospects, but investors’ focus for the rest of 2021 should be on whether Ford delivers the expected financial results.

Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.

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