What To Expect From Ford’s Q3 Earnings?

F: Ford Motor logo
Ford Motor

Ford (NYSE:F) is expected to publish its Q3 2023 results on October 26, reporting on another quarter that saw deliveries expand. We expect Ford’s revenues for the quarter to come in at about $40.28 billion, marking an 11% increase versus last year and marginally ahead of consensus estimates. We expect earnings to stand at $0.46 per share, also ahead of consensus estimates and about 50% higher than the same quarter last year. While the United Auto Workers union is currently on strike against the big Detroit automakers, including Ford, this is unlikely to impact the company’s Q3 earnings in a material manner. See our analysis of Ford’s Earning Preview for a closer look at what to expect when the company publishes Q3 results.

We note that F stock has had a Sharpe Ratio of 0.2 since early 2017, which is lower than 0.5 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.

Although the macro picture looks a bit more challenging for the automotive industry at large, due to high interest rates, which could be making financing vehicles more expensive, Ford has already reported relatively strong sales numbers for Q3, with U.S. deliveries jumping 7.7% year-over-year led by pickup trucks. Ford indicated last week that truck sales in the U.S. rose 15.3%, while car sales declined by about 5% and SUV sales were largely flat. While Ford previously guided that prices for vehicles would decline 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. Ford’s automotive division’s margins could benefit from cooling commodity prices as well as a favorable sales mix.

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  5. With F-150 EV Production Cut 50%, What Lies Ahead For Ford Stock?
  6. Will Strong F-Series Sales Power Ford’s Q2 Results?

While Ford stock could move higher if it beats earnings, we think it remains undervalued. Ford stock is trading at under 6x 2023 consensus earnings. We value Ford stock at about $17 per share, which is meaningfully 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.

 Returns Oct 2023
MTD [1]
YTD [1]
Total [2]
 F Return -3% 3% -1%
 S&P 500 Return 0% 12% 92%
 Trefis Reinforced Value Portfolio -2% 21% 522%

[1] Month-to-date and year-to-date as of 10/9/2023
[2] Cumulative total returns since the end of 2016

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