| | | F - Ford - $16.99 is the high print as of 5:54 pm today after the EPS report this evening
Ford Achieves Strong Q3 Results, Raises Full-Year 2021 Guidance;
Says Financial Flexibility Enables Ample Investment in Ford+ Plan
CFRA Reiterates Buy Opinion On Shares Of Ford Motor Company
---- 3:30 PM ET 10/27/2021
CFRA, an independent research provider, has provided the following research alert.
We increase our 12-month price target by $4 to $24 based on a '22 P/E of 10.9x and a premium to F's 10-year average forward P/E of 8.7x. We raise our adjusted EPS estimates by $0.30 to $1.90 for '21 and by $0.20 to $2.20 for '22.
Ford posts Q3 adjusted EPS of $0.51 vs. $0.65 (-21.5%), well above the $0.27 consensus.
The beat was driven both by stronger-than-expected sales and margins, as automotive revenue fell 4.3% to $33.2B ($440M above consensus) and adjusted EBIT margin contracted 130 bps to 8.4%. Ford cited both a significant increase in semiconductor availability and wholesale vehicle shipments for the strong results, which is important because chip supply has been a major overhang on the story.
Ford also raised 2021 adjusted EBIT guidance to $10.5B-$11.5B from $9B-$10B previously. We reiterate our Buy opinion, as Ford has arguably the most positive momentum surrounding its new vehicle portfolio of any automaker and we are bullish on its operational turnaround under the leadership of CEO Jim Farley.
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Ford Motor Co. (F) reported a $1.8 billion net income Wednesday for the third quarter of the year, down $0.6 billion from the same quarter last year.
Ford is "competing like a challenger," John Lawler, Ford chief financial officer, told reporters Wednesday.
Ford earnings in the quarter before interest and taxes — adjusted EBIT — was $3 billion, down $0.7 billion from the same period in 2020 and $1.8 billion higher than in 2019. EBIT does not include restructuring and other charges.
"We're gaining more and more traction," Lawler said, explaining that the company is better managing chip supply challenges that he expects could last until 2023 — though with less "scope and severity."
"We're going to have to be more nimble, more agile," Lawler said. "... We're working hard. The team is focusd."
Ford CEO Jim Farley and Lawler, who started as a team on Oct. 1, 2020, have watched the automaker's stock price more than double over the past year — despite the semiconductor chip shortage that slowed delivery of everything from the F-150 to the all-electric Mustang Mach-E, a recall of the Mach-E for improperly attached windshields and panoramic roof glass that may detach, and a recall of its all-new Ford Bronco to fix defective hard tops.
On Wednesday, Ford stock closed at $15.52. After earnings were announced in Q3 2020, stock closed at $7.70.
In big news for investors, Lawler revealed that the company will restore dividends to its shareholders in fourth quarter at a cost of about $400 million.
"I think what you're seeing is the confidence we have in the traction of the business and the trajectory of the business," Lawler told reporters, noting " incredible demand" for Ford products.
"We are not capital constrained. We have $31.5 billion in cash," he said. "We can fund all of our growth initiatives."
Ford ended the quarter with $31.5 billion in cash on hand and more than $47.4 billion in liquidity.
A year ago, Ford had $30 billion in cash on hand and $45 billion in liquidity.
Ford Credit saw earnings of $1.1 billion, the same as in the third quarter 2020.
For the first three quarters of the year, Ford's net income of $5.7 billion is up from the $1.5 billion through the first three quarters of 2020.
And third-quarter revenue was $36 billion compared with $38 billion in 2020.
The company raised its guidance for full-year EBIT, estimating 2021 earnings at $10.5 billion-$11.5 billion from previous guidance of $9 billion-$10 billion.
Ford is eager to get its vehicles off hold lots and delivered to consumers, Lawler said. He predicted cutting the 27,000 vehicles being held for parts now to fewer than 5,000 before the end of 2021, he said. Vehicles have made headlines for being stories in lots in Michigan, Missouri and Kentucky.
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