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Ford’s Q3 Results: Why Its Stock Rose 7.6% in After-Hours Trading

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Ford’s Q3 2018 earnings

Ford (F), the second-largest US automaker, announced its third-quarter results on October 24 after the market closed. In the third quarter, Ford’s adjusted EPS fell ~33.0% YoY (year-over-year) to $0.29. Its third-quarter earnings per share were slightly better than Wall Street analysts’ consensus estimate of $0.28, as compiled by Reuters.

Profitability disappointed

In the third quarter, Ford’s (F) global revenues rose 3.0% YoY to $37.6 billion. This total revenue figure included the company’s Automotive segment’s third-quarter revenues of $34.7 billion, which also rose 3.3% YoY.

Ford increased its third-quarter automotive revenues despite a 10.0% YoY decline in its global wholesale figures. This factor may have boosted investors’ optimism.

In contrast, Ford’s Automotive segment’s EBIT fell 26.3% YoY to $1.4 billion in the third quarter. This drop also affected the company’s third-quarter EBIT margin of 4.0%, which was much lower than its EBIT margin of 5.6% in the third quarter of 2017.

The company reported automotive EBIT losses from its South America, Europe, and Asia-Pacific segments. However, its EBIT profitability from its Middle East & Africa and North America segments remained strong.

No change in guidance

During its second-quarter earnings event, Ford (F) revised its 2018 earnings guidance downward. The company maintain its EPS guidance and expects its 2018 adjusted EPS to be $1.30–$1.50, lower than its original guidance of $1.45–$1.70.

On October 24, Ford stock closed at $8.18 with a 4.7% drop from its previous session’s closing price. Among the other auto stocks (XLY), General Motors (GM), Fiat Chrysler (FCAU), and Tesla (TSLA) settled with losses of 4.9%, 8.1%, and 1.9%, respectively, in Wednesday’s session.

At 4:40 PM EDT, Ford stock rose 7.6% in aftermarket trading at $8.80. Despite Ford’s ongoing struggle in markets like China and Europe, its third-quarter earnings beat, higher revenues, and strong profitability in North America could be key factors in its sharp recovery in aftermarket trading.

Tesla stock also rose in today’s aftermarket session.

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