Stock Analysis & Ideas

Ford Stock Is Under the Microscope Ahead of Earnings; Here’s What to Expect

With earnings season in full swing, all eyes this week are on the tech giants’ reports. However, a giant of a different kind is also readying to announce the quarter’s results. Once the brakes are pulled on today’s trading action, Ford (F) will step up to the earnings plate.

The Q3 statement comes in the wake of an upbeat report from General Motors, in which the company fared much better on the bottom-line than expected. That feat is unlikely to get a repeat from Ford. Last month, shares took a beating when the company said that on account of inflation and supply chain issues it will take on the chin extra costs of $1 billion in the third quarter. The company also said it expected Q3 EBIT to come in between $1.4 billion to $1.7 billion, some way off the $3 billion consensus had in mind. However, Ford also said it expects to make up for the issues in Q4 and, reassuringly, kept its full-year guidance intact.

For Q3, Wall Street is expecting revenue of $37.11 billion and EPS of $0.30. The latter figure is a touch below J.P. Morgan’s Ryan Brinkman’s call for $0.33. Given the pre-announcement, the JPM analyst isn’t expecting any major surprises on the profit front but there are other issues to look out for.

“More key to stock price reaction will be the discussion of headwinds and tailwinds impacting the softer 3Q results and the relative sustainability of those factors heading into 2023,” the analyst explained. “We see the potential for a positive reaction should the company explain (as we estimate) that premium costs incurred in the quarter related in large part to prior period inflationary pressures on suppliers and if it were confirmed that the stronger pricing trend implied in 3Q has carried forward into 4Q.”

All in all, Brinkman rates Ford shares an Overweight (i.e. Buy) backed by a $16 price target. What does this mean for investors? Potential upside of 25% from current levels. (To watch Brinkman’s track record, click here)

Ford currently elicits a wide range of views amongst Wall Street’s analyst community. Overall, the stock claims a Moderate Buy consensus rating, based on 7 Buys, 6 Holds, and 2 Sells. The average target is just slightly higher than Brinkman’s objective; at $16.47, the figure makes room for 12-month share appreciation of ~28%. (See Ford stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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