Key Takeaways

  • Analysts estimate adjusted EPS of $0.20 vs. -$0.23 for Q1 FY 2020.
  • Ford trucks sales, already announced, rose YOY.
  • Companywide revenue is expected to post a small increase YOY.

Ford Motor Co. (F) is running into unexpected obstacles as it attempts to transform itself into a leading high tech auto company during the pandemic. In late 2020, the automaker launched a five-year, $22 billion spending plan focused on new auto technologies such as electric vehicles and autonomous driving. But a global semiconductor shortage has forced the vehicle manufacturer to temporarily shutter multiple factories, disrupting sales.

Investors will watch how Ford is managing these challenges when the company reports earnings after the market on April 28, 2021 for Q1 FY 2020. Analysts expect Ford to report its third straight quarter of adjusted earnings per share (EPS) after a loss in the same quarter a year ago. At the same time, analysts expect a small increase in revenue, which would be only its second revenue increase in the past nine quarters.

Investors also will focus on a key Ford metric, total U.S. truck sales, which are highly profitable for the company. Ford truck sales, which the company already reported, posted the biggest increase in growth since Q4 FY 2019.

Ford's shares have performed well in the past year despite the company's erratic earnings and revenue performance. The company's stock began to outperform the broader market in May 2020, and has widened the gap since that time, fueled by a rally starting in late September. As of April 27, Ford stock has dramatically outperformed with a 1-year trailing total return of 141.6% versus 45.5% for the S&P 500.

One Year Total Return for S&P 500 and Ford
Source: TradingView.

Ford Earnings History

Prior to the start of the COVID-19 pandemic, Ford posted fiscal Q1 adjusted EPS in the range of $0.40 to $0.44 for the years 2017, 2018, and 2019. The first two quarters of FY 2020 saw the company's first adjusted losses per share in at least three years. But this trend reversed in Q3 FY 2020, when Ford's adjusted EPS of $0.65 was the highest in at least 15 quarters. Analysts estimate adjusted EPS of $0.20 for Q1 FY 2021. While that would be its third straight quarter of profits, it would be much smaller than in Q3 or Q4 of FY 2020.

Ford has faced major challenges in increasing revenue, which has fallen in seven of the past eight quarters. The exception was Q3 FY 2020, when revenue rose a scant 1.4% YOY. By contrast, Ford's revenue dropped by 14.9% in Q1 FY 2020 and, notably, by 50.1% in Q2 FY 2020 as the pandemic began to disrupt the U.S. economy. For Q1 FY 2021, analysts see a 1.6% increase in revenue.

Ford Key Stats
  Q1 FY 2021 Q1 FY 2020 Q1 FY 2019
Adjusted EPS ($) 0.20 (Estimate) -0.23 0.44
Revenue ($B) 34.9 (Estimate) 34.3 40.3
Total U.S. Truck Sales 277,233 (Actual) 263,757 278,898

Source: Visible Alpha; Ford Motor Co.

The Key Metric

As mentioned, investors also will closely watch total U.S. sales of Ford's trucks, by far the company's most popular vehicle type. Ford manufactures a range of light-, medium-, and heavy-duty trucks. Models include the F-150 series, Ranger, Super Duty, and more. In general, Ford's trucks tend to generate significantly higher profit margins than its smaller, lighter vehicles. The company has been making a strategic transition in recent years to shift production and sales toward more profitable pickup trucks and SUVs.

Ford posted YOY declines in U.S. truck sales for all quarters in FY 2020, except Q3 when they climbed by a marginal 0.6%. The biggest decline during this period was Q2 FY 2020, when sales plunged 26.6% YOY. Ford's U.S. truck sales for Q1 FY 2021, released prior to the company's earnings report, rose 5.1% YOY. This is the largest gain YOY in five quarters.

Ford's total vehicle sales - including trucks, cars and SUVS - rose at a slower pace in Q1, by only 1%. But that was far better than the YOY decline estimated by analysts. Analysts' companywide estimate is not a perfect predictor of Q1 estimates for truck sales specifically, but it does indicate that the overall analyst outlook for vehicle sales for Q1 FY 2021 was overly pessimistic.