What to Look For in the Ford Earnings Report

Ford Motor Co. (NYSE: F) reports first-quarter earnings after the closing bell Wednesday. Year over year, earnings and revenues are expected to be slightly better, but it would probably be a stretch to say analysts are looking for a big surprise.

According to data compiled by Kelley Blue Book, first-quarter North American sales volume is down 2.7% and Ford’s market share has dipped by 4.6% from 15.3% in the year-ago first quarter to 14.6% in 2018.

The only bright spot for the company is sales of its F-Series pickups, but then that’s no surprise. F-Series sales rose 4.3% to 214,191 units in the first quarter, and Ford’s average transaction price for its best-selling vehicle continues to climb.

The year-over-year gain in 2017 transaction prices for the F-Series was $3,200. In January, the average transaction price was $1,400 higher than in January 2017. February’s average rose by $1,500 year over year, and the March average was $1,700 higher this year. The average transaction price for an F-Series truck has hovered around $47,000 in the first three months of the year.

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In Europe, Ford sold 290,948 units in the first quarter, down 15.7% compared with the first quarter of 2017. March sales were down 14.9% year over year. Market share dropped from 8.2% a year ago to 7.4% in March and for the quarter European market share fell from 8.3% to 7.0%.

Analysts are expecting first-quarter earnings per share (EPS) of $0.41, up from $0.39 a year ago, and revenues of $37.16 billion, up from $36.48 billion. When Ford reported results in January, consensus estimates called for EPS of $0.44 on sales of $37.49 billion.

But even the lowered bar may be hard to hop over. Operating margins were lower in the first quarter, and even though CEO Jim Hackett has made managing gross profit margins a main focus, getting a handle on commodity costs and currency exchange rates in the current environment will continue to be a challenge.

Ford’s stock traded up about 0.2% just in the noon hour on Wednesday, at $10.98 in a 52-week range of $10.14 to $13.48. The 12-month price target is $12.34. At the current price, Ford’s dividend yield is 5.29%, a level that the company may be unable to sustain.

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