Ford (NYSE:F) is expected to publish its Q2 2023 results on July 27, reporting on a quarter that saw deliveries continue to expand. We expect Ford’s revenues for the quarter to come in at about $40.30 billion, marking a 6% increase versus last year and marginally ahead of consensus estimates. We expect earnings to stand at $0.54 per share, in line with consensus estimates. See our analysis of Ford’s Earning Preview for a closer look at what to expect when the company publishes Q2 results.
Although the macro picture is looking a bit more challenging for the automotive industry at large, due to high interest rates and concerns about a U.S. recession, Ford actually reported solid delivery numbers for Q2. Total vehicle sales in the U.S. rose by 10% year-over-year to about 531,600 units in Q2, driven primarily by surging sales of trucks. Led by the F-Series brand, truck sales were up by roughly 26% year-over-year, although both the SUV and sedan sales were down. While Ford previously guided that prices for vehicles would decline by about 5% in 2023, due to some discounting after over a year of significant price increases, we expect the impact of this to be offset by a more favorable sales mix given that trucks typically have higher average selling prices. We also expect margins to see some improvement driven by the higher volumes, cooling commodity price inflation, and higher sales of pick-up trucks. Over Q1 2023, adjusted operating margins were up by 140 basis points to 8.1% and we could see a similar increase in Q2 as well.
While Ford stock could move higher if it beats earnings, we think the stock remains undervalued. Ford stock is trading at under 8x 2023 consensus earnings. We value Ford stock at about $18 per share, which is 29% ahead of the current market price. See our analysis on Ford Valuation: Expensive Or Cheap for more details on what’s driving our price estimate for Ford. For more information on Ford’s business model and revenue trends, check out our dashboard on Ford Revenue: How Ford Makes Money.
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