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Ford Q2 FY2022 Earnings Report Preview: What to Look For

Focus on F total automobiles sold

Key Takeaways

  • Analysts estimate adjusted EPS of $0.44 vs. $0.12 in Q2 FY 2021.
  • The number of automobiles sold is expected to rise YOY for the first time in four quarters.
  • Revenue is expected to increase YOY by the largest amount in at least four and a half years.

Ford Motor Co. (F) has been hampered by the COVID-19 pandemic and global supply chain shortages for more than two years. The result has been low vehicle inventories and plunging sales as the company failed to meet demand. That's changing. Ford posted soaring sales in June amid higher deliveries of trucks and SUVs, including a new all-electric pickup. The increases come as Chief Executive Officer (CEO) Jim Farley has boosted Ford's spending on electric vehicles (EV) to $50 billion to transform the company into a leader in the EV market.

Investors will be watching to see how these developments are impacting Ford's financial results when the company reports earnings on July 27, 2022 for Q2 FY 2022. Analysts expect adjusted earnings per share (EPS) to grow YOY for the first time in four quarters as revenue climbs by the most in at least more than four and a half years.

Investors will also be focusing on the total number of automobiles sold, a key metric to watch amid global supply chain disruptions and shortages of critical parts, such as semiconductors. Analysts expect Ford to boost its total number of autos sold for the first time in four quarters, and by the largest amount in at least several years.

Ford stock has gone through major swings in the past year, but it has outperformed the broader market in that time. The shares lagged the market for most of August and September 2021. Late in September, the shares began a prolonged advance through January 2022. Since that time, Ford stock has steadily dropped through June 2022, giving up essentially all of the gains. In the last few weeks, Ford shares have staged a small advance. As of July 26, the company stock has provided a 1-year trailing total return of -9.1%, slightly ahead of the return of -10.3% for the S&P 500.

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

Ford Earnings History

Ford's earnings record has been erratic in recent years. The company's annual adjusted EPS fell for three straight years: in fiscal years 2018, 2019, and 2020. It posted a 65.5% decline in 2020. Ford created the foundation of a profit recovery in FY 2021 by posting a 288.7% increase in adjusted EPS. While EPS fell sharply in Q1 FY 2022, analysts expect adjusted EPS to nearly quadruple in the second quarter of this year.

Ford's revenue history has been very turbulent. The company posted a streak of six consecutive quarters of YOY revenue declines from Q1 FY 2019 through Q2 FY 2020. But in FY 2021, Ford was able to boost revenue in three of the four quarters, helping it to report the first full-year increase in revenues, up 7.2% after two years of annual declines. Analysts predict that Ford's revenue will accelerate in the second quarter of this year, increasing 39.0%. This would be the largest quarterly growth in automaker in at least four and a half years.

Ford Key Stats
  Estimate for Q2 FY 2022 Q2 FY 2021 Q2 FY 2020
Adjusted Earnings Per Share ($) 0.44 0.12 -0.35
Revenue ($B) 37.2 26.8 19.4
Total Automobiles Sold  990,300 764,000 645,000

Source: Visible Alpha

The Key Metric

As mentioned above, investors will also be watching Ford's total number of automobiles sold. The company produces and sells a full line of trucks, utility vehicles, vans, and cars. But to manufacture these vehicles, the company depends on global suppliers for different components. Shortages in key components can easily lead to disruptions in production. Surging demand for consumer electronics during the pandemic resulted in a global shortage of semiconductors, which have become key components in automobiles. Despite Ford's rising June sales, the shortage earlier this year forced Ford and other automakers to scale back production, thus reducing the number of vehicles they are able to sell. The company is also is grappling with how to deal with the surge in inflation and the repercussions of Russia's invasion of Ukraine, which have sparked higher prices and supply disruptions that have affected specific models.

Ford's annual auto sales have fallen for five straight years through 2021. In fiscal years 2015 through 2017, the auto maker sold over 6.6 million cars each year. That dropped to 5.4 million in 2019, 4.2 million in 2020, and 3.9 million last year, in FY 2021. Quarterly autos sold figures have declined in all but one of the last 17 consecutive quarters. The one quarter of improvement, Q2 FY 2021, saw an 18.5% increase, but that still was lower compared with the other quarters. Analysts now expect growth to accelerate YOY as Ford increases autos sold by an estimated 29.6% YOY in Q2 FY 2022.

Article Sources
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  1. Wall Street Journal. "Ford’s U.S. Sales Increase 32% in June, Outpacing Broader Industry."

  2. Bloomberg. "Ford Plans Up to 8,000 Job Cuts to Help Fund EV Investment."

  3. Ford Motor Co. "Ford Motor Company Announces Details for Q2 2022 Earnings Conference Call," Page 1.

  4. Visible Alpha. "Financial Data."

  5. Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2021," Page 1.

  6. Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2021," Pages 18 and 34.

  7. Reuters. "GM, Ford steer into the headwinds of inflation, rising rates."

  8. Reuters. "Ford says European production hit by chip shortage, Ukraine conflict."

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