Ford (P) Q1 Revenue Suffers From Chip-Related Barriers

wade through F is scheduled to release first-quarter 2022 results on April 27, after the closing bell. Zacks’ Consensus forecasts for quarterly earnings and earnings are pegged at $29.95 billion and 41 cents per share, respectively.

The Zacks Consensus forecast for Ford’s first-quarter earnings per share has fallen by 2 cents in the past 30 days. The bottom-line projection calls for a year-on-year decline of 54%. The Zacks Consensus forecast for quarterly earnings also shows a year-over-year decline of 10.7%.

US auto biggie missed earnings estimates in the last reported quarter due to lower-than-expected profits in North America and pre-tax losses in Europe. Over the past four quarters, Ford has topped revenue estimates on three occasions and missed one, by an average surprise of 179.3%. This is illustrated in the graph below:

Ford Motor Company Prices and EPS Surprise

Ford Motor Company Prices and EPS Surprise

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

Whispers Earnings

Our proven model does not conclusively predict Ford’s earnings for the quarter to be reported, because it lacks the right combination of the two key ingredients. The combination of a positive Earning ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases earning opportunities. You can find the best stocks to buy or sell before they are reported with our ESP Earnings Filter.

ESP Earnings: Ford has an ESP Revenue of +7.84%. This is because the Most Accurate Estimate of 44 cents per share is pegged 3 cents higher than the Zacks Consensus Estimate.

Zack’s Rank: Currently has a Zacks Rank of 5 (Strong Sales).

you can see Complete list of Zacks #1 Ranking stocks today here.

Factors Shaping Ford’s Q1 Results

A drop in vehicle sales during the first quarter of 2021 due to escalating supply chain issues exacerbated by the Russo-Ukrainian war is likely to weigh on Ford’s forthcoming results. The chip woes – exacerbated by the Russo-Ukrainian war – are limiting vehicle supply despite strong demand.

As a result, Ford witnessed a 17% year-on-year decline in new vehicle sales in the United States during the January-March period. Ford truck sales fell 23%, while car and SUV sales fell 49% and 5.1%, respectively. Ford’s most profitable F-Series pickups, including the F-150 and larger versions, saw year-on-year sales declines of 31% during the first quarter and 47% in March. As a result, the Zacks Consensus Estimate for total auto revenue is pegged at $31.9 billion, representing a decline from the $33.6 billion recorded in the first quarter of 2021.

High commodity costs, difficult labor markets and logistical challenges are also likely to be damaging. In its latest earnings call, Ford warned that commodity inflation would cap the company’s profit levels in the near term. Massive spending on modernization — including connectivity, IT, and product launches — is also expected to reduce margins. Amid lower revenues and high manufacturing and operating costs, Ford is expected to experience lower EBIT in the various end markets served.

The consensus mark for EBIT from North America was pegged at $2,191 million, implying a decline of 25.7% from the year-ago period. The consensus estimate for a pre-tax loss in South America is $78 million, representing a decline from a $73 million loss in the first quarter of 2021. For Europe, the Zacks Consensus Estimate is pegged at a pre-tax loss of $35.6 million. In the last year period, it recorded a profit before tax of $341 million.

Stocks With Profitable Combinations

While the earnings hit seems uncertain for Ford, here are some stocks in the auto space that, according to our model, have the right combination of elements to post an earnings beat for the quarter to report:

Allison Transmission ALSN has +10.35% Earning ESP and Zacks Rank #3. The stock will report first-quarter 2022 earnings on April 27.

The Zacks Consensus forecast for earnings and quarterly earnings Allison will report are pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN topped revenue estimates in the last four quarters, by an average of 13.4%.

LKQ Corp LKQ has +0.37% Earning ESP and Zacks Rank #3. The stock will report first-quarter 2022 earnings on April 28.

Zacks’ Consensus forecast for earnings and quarterly earnings that LKQ will report are pegged at 91 cents per share and $3.28 billion, respectively. Encouragingly, LKQ topped revenue forecasts in the last four quarters, by an average of 33.9%.

Cummins, Inc. CMI has +1.68% Earning ESP and Zacks Rank #3. The stock will report first-quarter 2022 earnings on May 3.

The Zacks Consensus forecast for Cummins quarterly earnings and earnings to be reported is pegged at $3.55 per share and $6.02 billion, respectively. Over the past four quarters, CMI has topped revenue estimates by more than twice, by an average 0.5% surprise.

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