- Analysts estimate adjusted EPS of $0.48 vs. $0.34 in Q4 FY 2020.
- The number of automobiles sold is expected to decline YOY.
- Revenue is expected to rise YOY despite global supply chain disruptions, rebounding from the most recent quarter's decline.
Ford Motor Co. (F) has struggled to make enough vehicles to meet surging demand amid the pandemic-induced supply chain disruptions and the global semiconductor shortage. In the latest sign of stress, Ford in late January said that it will take no new orders until 2023 for its popular, gasoline-electric Maverick pickup truck, a high-technology, chip-intensive vehicle. These challenges are one reason why Ford is expected to post its fifth straight year of falling auto sales in 2021.
Investors will be looking to see how Ford is managing the chip shortage when it reports earnings on Feb. 3, 2022 for Q4 FY 2021. For Q4, analysts currently expect adjusted earnings per share (EPS) and revenue to rise, a significant improvement after the company posted declines in both metrics in the previous quarter.
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 as noted above. For Q4, analysts expect the total number of automobiles sold by Ford to decline for the second straight quarter. Ford has been able to partly offset falling vehicle sales by boosting prices amid soaring demand. Late last year, it boosted prices on 2022 models by as much as $3,000 per vehicle.
Shares of Ford have dramatically outperformed the broader market over the past year. While the stock mostly outperformed through the first seven and a half months of the past year, its outperformance gap with the market began to widen around mid-September 2021. Its performance peaked around mid-January 2022 and has given back some of its gains over the past few weeks. Ford's shares have provided a total return of 92.7% over the past year, well above the S&P 500's total return of 20.5%.
Ford Earnings History
Ford reported mixed Q3 FY 2021 earnings results. Adjusted EPS beat analysts' expectations, but sank 22.6% compared to the year-ago quarter. It was the first decline in adjusted EPS since the second quarter of FY 2020. Revenue missed consensus estimates and was down 4.9% year over year (YOY), the first decline since the final quarter of FY 2020. The company noted that semiconductor availability remained a challenge but was much better than it was in the second quarter.
In Q2 FY 2021, Ford's earnings and revenue beat analysts' consensus estimates. Adjusted EPS came in positive for the quarter, a significant improvement from the year-ago quarter's adjusted loss per share. Revenue grew 38.1% YOY, its fastest pace in at least 13 quarters. The company highlighted the headwinds it faced relating to the shortage of semiconductors, but said that its performance was better than expected in spite of those challenges.
Analysts expect Ford's financial performance in Q4 FY 2021 to improve compared to the previous quarter. Adjusted EPS is expected to increase 42.0% compared to the year-ago quarter as revenue grows 4.5%, a turnaround from the declines posted in the third quarter. For full-year FY 2021, analysts expect adjusted EPS to rise 355.0%, ending a streak of three straight years of declines. Annual revenue is expected to rise 7.0%, ending a streak of two consecutive years of falling revenue.
|Ford Key Stats|
|Estimate for Q4 FY 2021||Q4 FY 2020||Q4 FY 2019|
|Adjusted Earnings Per Share ($)||0.48||0.34||0.12|
|Total Automobiles Sold (thousands)||1,114.4||1,237.0||1,353.0|
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, 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. The shortage has forced Ford and other automakers to scale back production, thus reducing the number of vehicles they are able to sell. It also prompted the company in November to reach a collaboration agreement with GlobalFoundries, a semiconductor manufacturer, in order to advance semiconductor manufacturing and technology development in the U.S.
The total number of automobiles sold by Ford has been falling for a number of years. After rising 4.9% in FY 2015, growth in automobiles sold decelerated to a pace of 0.2% in FY 2016. In 2017, the number of autos sold fell 0.7%. But that was only the beginning of the declines. The next year, autos sold sank 9.5% and then 9.9% in FY 2019. In FY 2020, total automobiles sold plummeted 22.3%. The declines continued into FY 2021, with total autos sold falling 5.7% YOY in the first quarter. However, they rose 18.5% YOY, the first growth since the final quarter of FY 2017. But the declines returned in the third quarter as total autos sold fell 14.1% YOY. Analysts expect autos sold to fall 9.9% YOY in Q4 FY 2021 and to decline 5.6% for full-year FY 2021.
The Wall Street Journal. "Car Sales Continue Hot Streak, but Market Shows Signs of Cooling." Accessed Feb. 2, 2022.
Visible Alpha. "Financial Data." Accessed Feb. 1, 2022.
Reuters. "Ford to halt orders for hybrid pickup Maverick." Accessed Feb. 2, 2022.
Ford Motor Co. "FORD MOTOR COMPANY ANNOUNCES DETAILS FOR Q4 2021 EARNINGS CONFERENCE CALL." Accessed Feb. 1, 2022.
CarsDirect. "Ford Raises 2022 Car Prices Before Christmas." Accessed Feb. 2, 2022.
Ford Motor Co. "3Q 2021 Earnings—Press Release," Page 2. Accessed Feb. 1, 2022.
Ford Motor Co. "2Q 2021 Earnings—Press Release," Page 3. Accessed Feb. 1, 2022.
Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2020," Page 1. Accessed Feb. 2, 2022.
Ford Motor Co. "Form 10-K for the fiscal year ended December 31, 2020," Page 16. Accessed Feb. 2, 2022.
Ford Motor Co. "GlobalFoundries, Ford to Address Auto Chip Supply and Meet Growing Demand." Accessed Feb. 2, 2022.