Ford (NYSE:F) stock didn’t jump after the company reported its most recent round of earnings results. Yet, the bulls should be back in control soon enough. I am bullish on Ford stock because, despite a slower-than-anticipated timeline for full EV production, the company’s fiscal figures point to an automaker that’s on the right track in 2023.
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Ford has been a manufacturer of cars and trucks for many years, but the company seeks to evolve into a leading maker of clean-energy vehicles. That’s easier said than done, however, and it might take longer than Ford’s shareholders probably hoped it would.
Don’t lose faith in Ford, though, as CEO Jim Farley hasn’t abandoned the company’s EV-market aspirations. Just maybe, a dream deferred could still be achieved, and an old company like Ford can adapt to new vehicle trends in the 2020s.
Ford’s Challenge: Ramping Up Its EV Division
First, I feel obligated to acknowledge Ford’s least impressive result during this year’s second quarter. Ford’s EV division, known as Model e, generated $1.8 billion in sales during the quarter but still managed to incur a loss of $1.1 billion. Furthermore, Ford anticipates a full-year EBIT “loss of about $4.5 billion for Ford Model e.”
On top of that, it looks like Ford is giving up on its goal of manufacturing two million EVs per year by the end of 2026 and currently expects its EV division to achieve a “reach a 600,000-unit EV production run rate during 2024,” which may be slower and later than some investors had probably hoped for.
Nonetheless, Farley chooses to see the glass as half-full. “The near-term pace of EV adoption will be a little slower than expected, which is going to benefit early movers like Ford,” he assured in the company’s quarterly press release. Additionally, Farley stated, “EV customers are brand loyal and we’re winning lots of them with our high-volume, first-generation products.”
Ford Beats the Street and Raises Its Guidance
Only time will tell whether Ford will successfully ramp up its EV production schedule. For the time being, however, Ford is still making plenty of money selling traditional vehicles. Moreover, Ford’s second-quarter 2023 financial results exceeded Wall Street’s expectations.
Analysts assumed that Ford would generate $43.2 billion in quarterly revenue, but the company actually achieved revenue of $45 billion, up 12% year-over-year. Turning to the bottom line, Ford earned $0.72 per share in Q2 2023 versus the $0.54 per share that analysts had predicted.
This is great news for a company that’s undergoing a major transition. Farley acknowledged, “The shift to powerful digital experiences and breakthrough EVs is underway and going to be volatile.” Yet, as long as Ford’s traditional cars and trucks continue to entice customers and generate strong sales, the company should be well-positioned to manage its challenging transitional period.
It’s also encouraging to see that Ford’s management lifted the company’s full-year 2023 outlook. Specifically, Ford guided for 2023 consolidated adjusted EBIT of $11 billion to $12 billion and adjusted free cash flow of $6.5 billion to $7 billion.
Perhaps most intriguingly, however, Farley teased that Ford has “clean-sheet, next-generation products in advanced development that will blow people away.” Personally, I’m looking forward to Ford’s upcoming mind-blowing vehicles and will pay close attention as Ford navigates the next chapter of its legendary story.
Is Ford Stock a Buy, According to Analysts?
Turning to Wall Street, F stock is a Hold based on five Buys, five Holds, and three Sell ratings. The average Ford stock price target is $14.83, implying 8% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell Ford stock, the most profitable analyst covering the stock (on a one-year timeframe) is Philippe Houchois of Jefferies (NYSE:JEF), with an average return of 39.78% per rating. Click on the image below to learn more.
Conclusion: Should You Consider Ford Stock?
Surprisingly, Ford stock didn’t jump after the company released its quarterly results. That’s not a problem, though, for savvy investors who are on board with Ford’s plans to evolve into a premier EV producer.
Besides, the numbers don’t lie, and Ford’s quarterly statistics surpassed the experts’ consensus forecasts. So, definitely keep an eye on Ford, even if its timeline to full EV production is slower than anticipated. Despite the company’s challenges, I heartily believe F stock is a long-term investment to consider right now.
