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How Investors Reacted to Ford’s 4Q17 Report

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Ford’s 4Q17 report

Ford Motor Company (F), the second-largest US automaker, announced its 4Q17 results on January 24, 2018. In 4Q17, Ford’s adjusted EPS (earnings per share) stood at $0.39, about 30% higher than the company’s adjusted earnings of $0.30 per share in the same quarter of 2016. However, its EPS was much worse than Wall Street analysts’ estimate of $0.45 for 4Q. Let’s take a closer look at how Wall Street reacted to Ford’s fourth-quarter earnings.

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Ford stock

Before its fourth-quarter earnings announcement, Ford stock witnessed positive movement and closed at $12.05 on January 24, 2018, about 0.75% higher than the previous session’s closing price. On the same day, the stock turned negative and fell to $11.99 in the after-hours trading session after the earnings release.

Despite the year-over-year rise in Ford’s bottom line, its lower-than-expected earnings could be the primary reason for this pessimism on Wall Street. During the 4Q17 earnings announcement, Ford’s management also confirmed its dismal guidance for 2018. According to the guidance, the company’s adjusted EPS could be in the range of $1.45 to $1.70, lower than its adjusted EPS of $1.78 in 2017.

The broader market has largely traded on a positive note in 2018 so far. As of January 24, the S&P 500 benchmark (SPY) (SPX-INDEX) has gone up by 6.1% on a month-to-date basis. However, investors’ low expectations from Ford’s 4Q17 earnings have driven its stock lower by 3.5% month-to-date.

Unlike Ford, the stocks of other automakers (IYK) such as General Motors (GM), Fiat Chrysler (FCAU), and Ferrari (RACE) have risen by 7.7%, 35.4%, and 13.4% month-to-date, respectively.

Series preview

In this series, we’ll explore Ford’s 4Q17 revenues and profitability and find out what factors drove them. We’ll also explore some key highlights of its fourth-quarter earnings report.

Let’s begin by looking at Ford’s 4Q17 performance in its largest market, North America.

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