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What's in the Offing for Ford (F) This Earnings Season?

Ford F is slated to release second-quarter 2020 results on Jul 30, after the closing bell. The Zacks Consensus Estimate for the quarter’s loss is pegged at $1.30 per share on revenues of $14.36 billion.

Notably, the U.S. auto biggie reported weaker-than-expected results in the last reported quarter, primarily on lower revenues across all major markets served. Over the trailing four quarters, Ford beat estimates on two occasions for as many misses, the average negative surprise being 30.49%. This is depicted in the graph below:

Ford Motor Company Price and Consensus

Ford Motor Company Price and Consensus

Ford Motor Company price-consensus-chart | Ford Motor Company Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for Ford’s second-quarter loss per share has been unrevised at $1.30 in the past seven days. This compares unfavorably with the year-ago quarter’s 32 cents per share. The Zacks Consensus Estimate for revenues also suggests a year-over-year plunge of 59.85%.

Factors to Note

With the pandemic rattling the auto industry, Ford is expected to have been affected by the decline in customer demand and the bleak world economy outlook. Its second-quarter performance is likely to have taken a hit due to disruptions across customer and supplier operations, and lower end-market demand. The firm is expected to have incurred second-quarter operating loss of more than $5 billion. Decline in vehicle sales across all major markets served, including the United States and Europe, is likely to have weighed on Ford’s second-quarter 2020 sales and earnings. Nonetheless, higher year-over-year vehicle sales in China might have offered some respite.

The Zacks Consensus Estimate for revenues in the North American region — which is the most significant market for the company — is pegged at $7,714 million, indicating a decline from the year-ago figure of $24,000 million. Lower vehicle sales amid bleak demand for passenger cars and SUVs due to the coronavirus outbreak in multiple states are likely to have hurt revenues in the to-be-reported quarter. Total vehicle sales in the United States plummeted 33.3% year on year in the second quarter.

The Zacks Consensus Estimate for revenues from the European market is pegged at $3,519 million, suggesting a decline from the year-ago reported figure of $7,600 million. Notably, total vehicle sales in Europe were 168,650 units, calling for a decline of 51.4% year on year in the June-end quarter.

Moreover, the Zacks Consensus Estimate for revenues from the South American and Middle East & Africa markets are pegged at $410 and $228 million, respectively, suggesting a decline from the year-ago reported figure of $1,000 million and $600 million.

Nevertheless, recovery in the Chinese market is likely to have offered respite. Ford sold 158,589 vehicles, displaying a rise of 3% year over year in China during the to-be-reported quarter. This upswing was primarily driven by robust demand amid the suspension of the pandemic-induced lockdown restrictions in the country and a strong product mix. Further, Ford’s focus on cost-cutting efforts, including reduction of operating costs, lowering capital expenditures and deferring portions of executive salaries in the quarter, amid the pandemic, is expected to have aided quarterly margins to some extent.

Earnings Whispers

The proven Zacks model does not conclusively predict an earnings beat for Ford this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Ford has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ford currently carries a Zacks Rank #3.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

Genuine Parts Company GPC has an Earnings ESP of +43.33% and carries a Zacks Rank #3 currently. The company is set to announce quarterly figures on Jul 30.

Group 1 Automotive, Inc. GPI has an Earnings ESP of +114.82% and carries a Zacks Rank #3 currently. It is scheduled to report earnings results on Jul 30.

Oshkosh Corporation OSK has an Earnings ESP of +20.14% and carries a Zacks Rank #3 currently. The company is slated to release quarterly numbers on Jul 30.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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