Ford (NYSE:F) is set to report fourth-quarter earnings on Wednesday, Feb. 5 and it is likely the automaker is going to end the year on a high note. 

That will be a welcome relief for investors who saw Ford’s stock collapse 18% after its second-quarter results and fail to gain any traction since. F stock has lost a quarter of its value since the end of July, but with Q4 sales showing strength in both gas-powered and electric vehicles, investors should get a little respite from the gloom. However, it might not last long.

What Wall Street wants

Wall Street is looking for revenue to dip just a little for the period while profits are forecast to jump. Analysts, though, have a sell rating on F stock even as they have an $11.82 per share one-year price target assigned, implying 17% upside in the shares.

	Q423 Results	Wall Street Consensus Est.	% Change
Revenue	$43.21 billion	$42.83 billion	(0.9%)
EPS	$0.29	$0.32	10.3%

Management is looking for full-year operating profits to come in at $10 billion, which was at the lower end of the $10 billion to $12 billion range it previously expected, while its free cash flow outlook was unchanged at between $7.5 billion to $8.5 billion. Ford also guided capital expenditures slightly lower to $8 billion to $8.5 billion, from a high-end forecast of $9 billion.

Putting the pedal to the metal

Ford maintained its position atop the light- and heavy-duty truck market as its F-series of pickup truck sales jumped 21% year-over-year. It was the 48th consecutive year Ford trucks were the best-selling trucks in the U.S. Across all powertrains and vehicle types, sales rose 6%.

The automaker had a strong quarter, with sales across gas, diesel, hybrid, and all-electric vehicles jumping 17% from last year, with the F-series surging 25%. The overall sales growth rate for the year was double the industry average, though it came in third behind General Motors (NYSE:GM) and Toyota (NYSE:TM).

Ford had a particularly strong quarter for EVs, with sales growing 16% to 30,176 vehicles (GM was up 50% with 43,982 EVs sold) giving it an 8.7% share of the market. That puts it in fourth  behind Tesla (NASDAQ:TSLA) at 44%, GM with 12.6, and Hyundai (OTC:HYLMF) at 11.4% when you include the Kia brand. 

EV sales surge

Both the Mustang Mach-E and Transit had a monster quarter as sales rocketed 35.6% and 56.5%, respectively. The F-150 Lightning, though, saw a 10.1% decline in sales and Ford paused production of the pickup in November as demand has fallen.

However, the Mustang is now responsible for 53% of all Ford EV sales and sold more vehicles than the Lightning and Transit combined. More notable, the EV version sold more than twice as many as the gas-powered model.

Yet this could be a short-lived hurrah. While interest rates started to come down, the Federal Reserve has halted further cuts as inflation has started rising again. Automakers, including Ford, were also heavy on offering incentives to buyers. Arguably more worrisome is the increased sales the EV industry saw in Q4 could be because of a pull-forward effect.

Following President Trump’s electoral victory in November, he promised to cut subsidies to the industry. One of the first executive orders he signed eliminates EV mandates, freezes EV infrastructure funding for things such as EV charging stations, and calls for the “elimination of unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs.”

While the language is somewhat vague and the impact uncertain, car buyers may have rushed to purchase an EV before anything concrete took effect. The sales burst may not repeat in 2025.

Key takeaways

Ford’s Q4 results could end up being a proverbial mixed bag. The automaker could beat Wall Street estimates on the top line, but because of promotions and incentives, fall short on the bottom. 

For example, the Ford Power Promise program includes a free home charger with standard installation at no extra cost along with access to a 24/7 advisor for support. It is also extending it into 2025 while offering interest-free financing on the Mach-E in January. The vehicle, though, is unprofitable and has lost Ford billions of dollars.

Although the quarter may look strong for Ford, it might not be the religious experience investors were hoping for.

 

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