Ford is up 5% after announcing its second quarter financials

By:
on Jul 30, 2022
  • Ford reported an adjusted EPS of $0.68 in the second quarter, topping the $0.45 per share analyst estimate.
  • The company brought in total revenue of about $40.19 billion in the same quarter
  • For the full year, the car manufacturer forecasts recording and adjusted EBIT of $11.5 to $12.5 billion

Ford (NYSE: Fshares rose 5% after the leading auto manufacturer announced better-than-expected second-quarter financial for the 2022 financial year.

Ford beats analyst consensus 

Ford reported an adjusted EPS of $0.68 in the second quarter, topping the $0.45 per share analyst estimate and beating the $0.13 it recorded in the same quarter of the previous fiscal year. The company brought in total revenue of about $40.19 billion in the same quarter, also thrashing the $37.05 billion consensus estimate.

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For the full year, the car manufacturer forecasts recording and adjusted EBIT of between $11.5 to $12.5 billion, again beating the $11.15 billion consensus projection. Ford also expects full-year adjusted free cash flow results of between $5.5 to $6.5 billion. The company said that vehicle shipment in China in the second quarter dropped because of COVID-19 lockdown restrictions.

Analyst comments and estimates 

Adam Jonas, a financial analyst at Morgan Stanley saw what he dubbed a big beat from the company, but he remains Equal Weight-rated even though he sees an attractive valuation.

Mr. Jonas told clients:

At the share price, we not only believe the EV ‘option’ value has been appropriately compressed to near zero NPV (as it should be), but the market may also be undervaluing the run-off cash flows of the ICE portfolio, which is going too far, in our view. ICE will decline, but the decline will go far beyond the end of the decade and we believe can produce substantial cash flows in the process.

Ryan Brinkmann, an analyst at JPMorgan, maintained a price target of $19 per share of F stock and his Overweight rating after the so-called “big beat”.

Mr. Brinkmann said:

We have increased confidence in Ford’s ability to meet its above-consensus full-year guidance after the firm reported much stronger than expected 2Q profits, benefitting from a combination of favorable industry mix and pricing as well as company-specific execution.

He added that while macro risks rose significantly since Ford reported its first-quarter earnings, pent-up retail demands due to softer vehicle productions the company experienced in the last 3 years will help offset some of the protracted downturns.

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