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Time for a Tune-Up: Ford's 1Q17 Earnings Estimates

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Part 2
Time for a Tune-Up: Ford's 1Q17 Earnings Estimates PART 2 OF 8

Why Ford’s 1Q17 Earnings Might Not Rise

Ford’s 1Q17 estimates

Previously, we looked at how Ford (F) stock continues to underperform the broader market in April. As of April 19, the company’s month-to-date performance has been better than other automakers (IYK) including Fiat Chrysler (FCAU), General Motors (GM), and Honda (HMC). In the last few quarters, Ford’s earnings haven’t been able to boost investors’ confidence due to stagnating sales and lower margins. Let’s take a closer look.

Why Ford’s 1Q17 Earnings Might Not Rise

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Existing trend in earnings

In 4Q16, Ford’s adjusted EPS (earnings per share) stood at $0.30—about 55% lower than the company’s adjusted earnings of $0.58 per share in 4Q15. The EPS figures were also worse than Wall Street analysts’ EPS estimates of $0.33 for 4Q16.

On the day of the company’s 4Q earnings, its stock fell 3.3%. Ford’s shrinking year-over-year revenues, sales volume, and profitability continued to haunt investors in the fourth quarter last year.

Also, Ford’s profitability from its truck segment got worse—unlike General Motors, Fiat Chrysler, and Toyota’s (TM) profitability.

Is the future dark?

Analysts expect the existing negative trend in Ford’s earnings to continue in the coming two or three quarters. According to analysts’ estimates, the company will likely post EPS of $0.36 in 1Q17. The EPS is ~47% lower than Ford’s EPS of $0.68 in the same quarter last year.

The company’s falling margins along with its weak fiscal 2017 guidance could be two key reasons behind analysts’ lower expectations.

Going forward in 2Q17, analysts don’t expect Ford’s earnings trend to improve much. According to these estimates, the company’s 2Q earnings could also fall 11% year-over-year to $0.46.

In the next part, we’ll discuss what Wall Street analysts recommend for Ford stock before its 1Q17 earnings event.

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