Will Ford’s Stock Pop After Earnings?

If Ford beats Wall Street's expectations, strong retail demand for the all-new 2021 F-150 will probably be a big part of the story. Image source: Ford Motor Company.

Ford Motor Company will report its first-quarter earnings after the market closes today, April 28. Will it meet or beat Wall Street’s expectations, or will investors be disappointed?

What Wall Street expects

Wall Street analysts polled by Thomson Reuters expect Ford to report an adjusted profit of $0.21 per share on automotive revenue of $32.23 billion.

That would be a big improvement over Ford’s results from a year ago, but not a surprising one. In the midst of the initial COVID-19 outbreak, Ford reported an adjusted loss of $0.23 per share on automotive revenue of $31.34 billion.

(In Ford’s lingo, “adjusted” figures exclude one-time charges and credits, while “automotive” revenue excludes revenue from Ford Credit, the company’s financial-services subsidiary.)

The chip shortage hurt sales, but Ford did OK

Ford’s production around the world was (and still is) constrained by an ongoing shortage of automotive-grade semiconductors. But Ford has been prioritizing higher-profit products and deliveries, and its sales results around the world were good under the circumstances.

• Ford’s overall U.S. sales were up just 1% in the first quarter from a year ago. But amid the chip shortage, Ford prioritized higher-profit retail sales over fleet deliveries, and the results were good: Ford’s retail sales jumped 23% from a year ago on high demand for its pickup trucks, SUVs, and the new electric Mustang Mach-E. Of particular note, overall sales of F-Series pickups, the company’s biggest generator of profits, were up 9.2% from a year ago.
• Much of China was shut down amid the pandemic in the first quarter of 2020. But Ford’s 73% year-over-year sales gain in the world’s largest new-car market is still impressive, and a sign that the turnaround plan put in place by Ford China chief Anning Chen is working well.
• In Europe, where another Ford turnaround effort is under way, the Blue Oval’s sales rose 7.7% in the first quarter, outperforming the overall market’s year-over-year gain. High points include strong demand for commercial vehicles and for the Puma, a small, sporty crossover SUV developed specifically for European customers.

Will Ford’s stock pop after earnings?

To be completely honest, I’m not sure. On the one hand, there’s a good chance that Ford’s per-share earnings number will beat expectations, as the company appears to have done a good job of managing its production and deliveries amid the chip-shortage constraints.

But I wonder if the chip shortage, which is very much still ongoing, will lead Ford to trim its full-year guidance. Ford said in February that auto investors can look forward to big year-over-year gains in operating profit and cash flow in 2021, if — if — the chip shortage isn’t too disruptive.

That “if” is what worries me. I think Ford will deliver strong first-quarter results. But if it cuts its full-year guidance, that might mute any post-earnings stock pop. We’ll find out later today.