Despite stronger-than-expected third-quarter sales and earnings, Ford’s stock saw a decline following the company’s cautious profit outlook for 2024. The automaker’s stock performance has been under scrutiny, particularly after it revealed its full-year operating earnings forecast, which came in at the lower end of the previously provided range.
While Ford reported a 5% growth in quarterly revenue, reaching $46 billion, its current profits significantly dropped by 25% to $0.9 billion. This decline is primarily attributed to a substantial $1 billion charge related to electric vehicle (EV) manufacturing assets. Although this represents some improvement over the previous quarter’s 30% stock price drop, the market remains concerned about Ford’s stock price.
The cautious profit outlook reflects a complex landscape for Ford as it navigates its EV strategy and a broader market reaction. Despite important gains, including profitability in global regions and significant contributions from China, the overall sentiment towards Ford’s stock price and stock performance remains mixed within the automotive industry update.
Key Takeaways
- Ford’s stock saw a fall despite surpassing Q3 sales and earnings expectations.
- The company forecasts full-year earnings at the lower end of its expected range.
- Quarterly revenue grew by 5% to $46 billion.
- Current profits were down by 25%, influenced by a $1 billion EV manufacturing charge.
- Despite some improvements, the market remains concerned about Ford’s stock performance.
Ford’s Quarterly Financial Performance
Ford exhibited notable resilience through the quarter, showcasing its strong market presence amidst a shifting automotive landscape.
Overview of Q3 Sales Performance
In the recent automaker financial update, Ford reported Q3 sales revenue of $46.2 billion, surpassing the estimated $41.9 billion. This 5% increase from the $43.8 billion revenue reported a year ago highlighted the company’s adaptability and strategic initiatives. The Ford earnings report revealed that adjusted earnings per share stood at $0.49, aligning with market expectations. However, the overall financial results showed a year-over-year decline in net income, significantly impacted by a strategic EV reassessment charge of $1 billion.
Despite these challenges, Ford’s US deliveries for Q3 rose by 4.3% year over year, reaching 504,039 vehicles. Notably, hybrid vehicle sales surged by 38%, and the F-Series pickups saw a sales increase of 4.2%. These figures underscore Ford’s robust performance in key segments despite the broader industry challenges.
Comparison with Previous Quarters
When comparing Q3 with earlier quarters, Ford news in 2024 indicated a stronger performance. In previous quarters, increased warranty costs and safety recalls had impacted financial results. For Q3 2024, Ford’s financial results were bolstered by steady sales across different models. Ford Pro unit reported $15.7 billion in revenue, and the Ford Blue unit posted $26.2 billion in revenue for the quarter. Although the Model e unit recorded $1.2 billion in revenue, it experienced a loss of $1.224 billion in EBIT. This segment’s ongoing challenges reflect the wider industry trend of facing initial setbacks in the electric vehicle transition.
| Segment | Revenue ($ billion) | EBIT ($ billion) |
|---|---|---|
| Ford Pro | 15.7 | 1.814 |
| Ford Blue | 26.2 | 1.627 |
| Model e | 1.2 | -1.224 |
Despite the quarterly positives, Ford’s 2024 full-year profit forecast for adjusted EBIT has been revised to about $10 billion, aligning with the lower end of the previously projected range. The complexities and financial strains in the EV segment seem to be a significant factor in shaping the future projections.
Market Reaction to Ford’s Earnings Report
Following the release of Ford’s Q3 financial results, stock market news highlighted a significant reaction from investors. After-hours trading saw ford stock falls by 6.07%, marking an ongoing yearly decline of 7%. This reaction can be attributed to Ford’s performance in the EV sector, where the company reported a loss of $1.2 billion for the quarter, contributing to a total loss of $3.7 billion for the first nine months of 2024.
Stock Market Reaction Post Q3
Despite Ford’s overall sales increase of 1% compared to Q3 2023 and a 3% rise in US retail sales during the third quarter, the stock market’s response was less than enthusiastic. Early trading saw ford stock falls over 8%, and the immediate reaction post-earnings release witnessed a near 5% decline. Analysts noted that Ford’s net income dropped by 25% to $900 million, greatly impacted by a $1 billion EV-related writedown.
Investor Sentiment and Analysis
Investor sentiment turned cautious as Ford revised its profit forecast to $10 billion adjusted EBIT. This new projection aligns with the lower end of the previously stated $10 billion to $12 billion range and falls short of analysts’ expectations of $10.6 billion. In contrast, General Motors raised its profit outlook for the third consecutive time, influencing market dynamics and further impacting investor sentiment.
Furthermore, analysts from RBC Capital Markets viewed the automaker guides cut as anticipated and realistic in light of ongoing industry challenges. UBS analysts remained cautious, highlighting Ford’s lower earnings, current valuation issues, and additional challenges such as higher warranty costs and inflation in certain regions.
| Metric | Ford Q3 2024 | Comparison |
|---|---|---|
| Revenue | $46 billion | 5% increase YoY |
| Adjusted EPS | $0.49 | Exceeds Wall St estimates |
| Net Income | $900 million | 25% decrease YoY |
| EV Sales in Q3 | 23,509 vehicles | 12% increase |
| Model e Loss | $1.2 billion | Total $3.7 billion loss for nine months |
| Adjusted EBIT Projection | $10 billion for 2024 | Lower end of $10-$12 billion range |
Factors Contributing to Ford’s Profit Outlook
Ford’s recent earnings report has sparked significant analysis, particularly around the company’s 2024 profit forecast. The automaker’s full-year adjusted EBIT prediction stands at around $10 billion, aligning with the lower end of its previous range of $10 billion to $12 billion.
Lower End of 2024 Profit Forecast
The 2024 profit forecast reflects cautious optimism amid notable challenges. Despite an impressive $46.2 billion in revenue for Q3, up 5% from the previous year, Ford’s EV segment remains a concern. Model e’s notable $1.224 billion loss and the overall forecast of a $5 billion full-year deficit illustrate underlying financial pressure. This situation directly impacts Ford stock performance, which saw a decline of over 8% in early trading following the earnings announcement.
Impact of EV Strategy Shift
Ford’s EV strategy shift is a critical component in understanding its profit outlook. The company has faced substantial hurdles in the EV market, leading to a significant shift in approach. The recent scaling back of investments, such as halting the development of a new three-row electric SUV, signifies a strategic recalibration. This shift is also intended to address the $1 billion EV-related charge that impacted net income in Q3. CEO Jim Farley has emphasized profitability within the first year of new EV model launches, focusing on sustainable and strategic growth. Despite the challenges, Ford reported a rise in adjusted operating earnings, showing determination in navigating the EV sector’s complexities and achieving long-term financial stability.
Comparative Performance: Ford vs. General Motors
In the competitive landscape of the automotive industry, the juxtaposition of Ford Motor Company and General Motors (GM) presents an intriguing study of contrasting market positions and future strategies. While GM reports an uptick in Q3 revenue and pretax profits, Ford wrestles with a more cautious outlook. As we delve into the recent performance and strategic direction of these two automotive giants, the disparities become evident.
GM’s Positive Outlook
General Motors has showcased a robust financial performance, with a market cap of $56.784 billion and a price-to-earnings (PE) ratio of 5.49. Their earnings per share (EPS) at 9.37 and a forward dividend yield of 0.91% further highlight the company’s solid footing. Notably, GM’s profit margin stands at 6.06%, reflecting efficient cost management and high-demand vehicle segments. The company’s return on equity (ROE) is an impressive 14.17%, underpinning strong shareholder value creation. Such metrics paint an optimistic picture for GM’s market position and its growth trajectory within the automotive industry.
Ford’s Market Position and Future Strategies
On the other hand, Ford’s market cap sits at $40.254 billion, with a notable year-to-date (YTD) return of -9.32% and a 1-year return of -15.42%. Despite these challenges, Ford holds nearly 13% of the US market share. The Ford Model e and Ford Blue units represent the company’s focused approaches towards combustion engines and battery electric vehicles (BEVs) respectively. Ford Pro’s commercial business and slightly growing U.S. sales indicate underlying strengths within Ford’s market position.
Moving forward, Ford’s future strategies will likely emphasize navigating dynamic market conditions, advancing cost management initiatives, and refining EV strategies to bolster competitive positioning against peers like GM. With 66% of 2023 revenue attributed to U.S. sales, Ford must leverage its strong domestic presence to drive future growth. Keeping an eye on market shifts and evolving consumer preferences will be crucial for sustaining resilience in a rapidly evolving industry.