Ford Motor Company Earnings Preview: What To Expect From F Stock
If the preliminary earnings estimates Ford Motor Company (NYSE: F) are any indication, Ford investors have very little to look forward to when the company officially reports its fourth-quarter earnings on Jan. 24.
Ford is expected to deliver lackluster earnings and revenue numbers, and investors will be more interested in any clarity management can provide on the company's ambitious autonomous vehicle and electrification initiatives.
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Ford says the company expects to report full-year 2017 adjusted earnings per share of $1.78. Analysts had been expecting full-year EPS of $1.83, and the soft number sent Ford stock tumbling nearly 7 percent.
Analysts are expecting Ford to report fourth-quarter revenue of $37.1 billion, up 3 percent.
Looking ahead to 2018, Ford said it expects EPS of between $1.45 and $1.70, suggesting its heavy investment in technology will result in negative earnings growth this year.
Ford has committed $11 billion to its long-term goal of bringing 40 electrified vehicle models and 16 full battery electric vehicles to the market by 2022. Ford's projected earnings decline is particularly troubling to investors considering competitor General Motors Co. ( GM) is anticipating earnings to be flat year-over-year.
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GM has also been investing heavily in electric an autonomous vehicle technology, but GM investors seem to be getting a better return on the investment up to this point. This week, Navigant Research named GM the overall market leader among 19 companies developing autonomous vehicle technology. Ford was fourth on Navigant's list behind Alphabet ( GOOG, GOOGL) subsidiary Waymo and Daimler-Bosch.
Ford CEO Jim Hackett, who joined the company in May, has warned investors that Ford's transition could be a long and costly one. But before investors and analysts can get too excited about the stock, Ford will need to demonstrate it is making some meaningful progress on its initiatives.
"We are hesitant to recommend the stock ahead of what we expect to be a significant capitulation of profits and restructuring actions that are needed to address over 10 percent of headcount, product and nameplate architecture and other items," Morgan Stanley analyst Adam Jonas says.
With the fourth quarter's disappointing earnings number already somewhat out of the bag, Ford stock will likely react more this week on potential updates from management than bottom- or top-line numbers.
Morgan Stanley has an "underweight" rating and $10 price target for Ford stock.
Wayne Duggan is a freelance investment strategy reporter with a focus on energy and emerging market stocks. He has a degree in brain and cognitive sciences from the Massachusetts Institute of Technology and specializes in the psychological challenges of investing. He is a senior financial market reporter for Benzinga and has contributed financial market analysis to Motley Fool, Seeking Alpha and InvestorPlace. He is also the author of the book "Beating Wall Street With Common Sense," which focuses on the practical strategies he has used to outperform the stock market. You can follow him on Twitter @DugganSense, check out his latest content at tradingcommonsense.com or email him at wpd@tradingcommonsense.com.
