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Why Ford (F) is Set to Maintain Earnings Beat Streak in Q1

Ford F is slated to release first-quarter 2021 results on Apr 28, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 15 cents a share and $32.38 billion, respectively.

The U.S. auto biggie delivered better-than-expected earnings in the last reported quarter on cost cut and restructuring efforts, primarily in the Europe market. Over the trailing four quarters, the company surpassed estimates on three occasions and missed on the other, with the average surprise being 180.8%. This is depicted in the graph below:

Ford Motor Company Price and EPS Surprise

Ford Motor Company price-eps-surprise | Ford Motor Company Quote

Investors predict an earnings beat for Ford this time around as well. Reassuringly, our model also indicates the same.

Trend in Estimate Revisions

The Zacks Consensus Estimate for Ford’s fourth-quarter earnings per share has been revised upward by a penny in the past seven days. In the year-ago quarter, it incurred a loss of 23 cents per share. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year improvement of 3.3%.

Earnings Whispers

Our proven model predicts 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. This has been elaborated below.

Earnings ESP: The company has an Earnings ESP of +6.16%. This is because the Most Accurate Estimate for loss is pegged 1 cent higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ford currently flaunts a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Demand for vehicles in first-quarter 2021 had been strong amid preference for personal mobility, widespread vaccination drive, optimism around federal aid and the gradual reopening of activities. Despite the global chip crunch that the auto industry has been battling, Ford’s first-quarter top and bottom lines are likely to have benefited from the rising sale of vehicles.

High year-over-year vehicle sales across major markets including the United States, Europe and China are likely to buoy its first-quarter 2021 results. Ford reported U.S. vehicle sales of 521,334 units, up 1% year over year, thanks to strong demand for trucks and SUVs, whose sales witnessed year-over-year growth of 5.1% and 14.3%, respectively. Total retail sales grew 23.1% year over year. Consequently, the Zacks Consensus Estimate for quarterly revenues for the North American region — the most significant market for the company — is pegged at $22,785 million, indicating an improvement from the year-ago figure of $21,800 million.

Further, Ford seems to have benefited from rising vehicle sales in the world’s largest car market i.e. China, wherein it commands a huge presence. The company’s vehicle sales in China increased 73.3% year over year to 153,822 units for first-quarter 2021, driven by a favorable product mix, and rising demand for Ford and Lincoln brands. Its revamped portfolio drove the firm’s China 2.0 business transformation plan and is likely to have boosted sales in the country.

Aggressive restructuring activities in the Europe market are also anticipated to reflect positively on the quarterly results. Ford’s first-quarter vehicle sales registrations witnessed year-over-year growth of 7.7% to 259,809 units, driven by higher volumes primarily in Britain, Italy and France. Consequently, the consensus mark for Ford’s revenues in the Europe market is pegged at $6,740 million, indicating an uptick from $6,200 million recorded in the corresponding period of 2020.

Other Stocks to Consider

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

LKQ Corp. LKQ has an Earnings ESP of +0.18% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on Apr 29.

Cummins CMI has an Earnings ESP of +6.41% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on May 4.

IAA Inc. IAA has an Earnings ESP of +5.60% and carries a Zacks Rank #2, currently. The company is scheduled to report quarterly numbers on May 4.

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Ford Motor Company (F): Free Stock Analysis Report
 
Cummins Inc. (CMI): Free Stock Analysis Report
 
LKQ Corporation (LKQ): Free Stock Analysis Report
 
IAA, Inc. (IAA): Free Stock Analysis Report
 
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