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Ford (F) Set to Report Q4 Earnings: What's in the Offing?

Ford Motor Company F is set to report fourth-quarter and 2018 results on Jan 23, after the market closes. In the last reported quarter, Ford’s earnings were in line with estimates. Over the past four quarters, the automaker’s earnings have surpassed estimates once, missed twice and have been in line once, the average negative surprise being 3.8%.

Over the past three months, shares of Ford’s have lost 2.5% against the industry’s increase of 15.4%.

Let’s see how things have shaped up for the upcoming announcement.

Ford Motor Company Price and EPS Surprise

Factors Influencing This Quarter

Ford is witnessing robust demand for its trucks and SUVs, owing to customers’ shifting focus toward spacious and comfortable vehicles. In fact, its F-Series, Ford Expedition and Lincoln Navigator are among the few winning models in its portfolio. In the United States, the company’s sales across truck and SUV segments created records in 2018.

Further, a strong mix expanded the average transaction pricing for Ford’s vehicles. On a year-over-year basis, the transaction price for the company surged $1,600 in December 2018 compared with an increase of $470 recorded by the overall industry.

Despite generating record sales in major driving segments, this automaker’s bottom line is waning. High costs, owing to metals tariffs, along with softening economic conditions in China and struggling business in Europe, are major headwinds for Ford.

In October, the company’s management announced that tariff-related costs slashed profits by about $1 billion. In the recently reported preliminary results, Ford mentioned that it expects adjusted earnings per share of 30 cents in fourth-quarter 2018, while adjusted earnings per share of 2018 is projected to be $1.30.

For the soon-to-release quarter, the Zacks Consensus Estimate for the company’s net sales from markets in North America, the Asia-Pacific and Europe is $23.6 billion, $3.3 billion and $8.3 billion, respectively.

Earnings Whispers

Our proven model does not conclusively predict earnings beat for Ford this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Earnings ESP: Ford’s Earnings ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 33 cents.

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 (Hold).

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are some stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:

Lear Corp. LEA has an Earnings ESP of +0.43% and a Zacks Rank #2. The company will report fourth-quarter 2018 financial figures on Jan 25.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Wabco Holdings Inc. WBC has an Earnings ESP of +1.30% and a Zacks Rank #3. The company’s fourth-quarter 2018 financial results are expected to release on Feb 15.

LKQ Corp. LKQ has an Earnings ESP of +0.11% and a Zacks Rank of 3. The company is expected to release its fourth-quarter 2018 financial results on Feb 28.

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