Following a bustling earnings week, investors are gearing up for another wave of corporate reports. Among the major names set to unveil their quarterly results is Ford Motor Company (F). While Ford’s stock performance has been lackluster recently, the impending Q4 earnings announcement poses the question: is F stock a solid value buy at present?
Both F and GM Shares Underperformed in 2023
During 2023, Ford stock struggled to make waves, primarily due to a series of setbacks including the UAW strike, the impact of new worker compensation, a slowdown in electric vehicle (EV) sales, a broad macroeconomic deceleration, and higher interest rates. These challenges were not unique to Ford, as rival General Motors (GM) also faced a similar fate.
Fast forward to 2024, and little has changed. Despite expectations of a decrease in interest rates, Ford’s situation remains challenging. However, General Motors recently astonished markets with its Q4 earnings, sparking curiosity about Ford’s potential to replicate GM’s feat upon releasing its own Q4 report.
Ford Q4 Earnings Preview
Analysts are anticipating Ford to reveal Q4 revenues of $41.38 billion, signifying a marginal year-over-year decline of less than 1%. Conversely, the company’s earnings per share (EPS) are projected to plummet by a substantial 74% to $0.13.
The drastic decline in earnings can be attributed to the ramifications of the UAW strike during the quarter. Despite the challenges, Ford eventually provided adjusted pre-tax profit guidance for 2024, albeit lower than its previous projections.
What to Watch in Ford’s Q4 Earnings Report
As the Q4 earnings report approaches, attention will be on Ford’s 2024 guidance, particularly in relation to the losses in the EV business and long-term profitability. The company’s stance on its product mix and potential comments on capital allocation, particularly regarding EV investments, are also areas of interest.
Automakers Reconsider Their EV Strategy
Moreover, observers will be keen to hear Ford’s perspective on its EV strategy amidst a shifting landscape, particularly after General Motors revised its approach to include plug-in hybrid electric vehicles.
What’s the Ford Stock Forecast Ahead of Q4 Earnings?
Morgan Stanley analyst Adam Jonas, known for his optimism towards Tesla, is notably bullish on Ford stock pre-Q4 report. In contrast, broader market sentiment reflects a more conservative stance, with a consensus rating of “Hold” by analysts. Despite this, Ford’s mean target price of $13.52 represents an 11.3% increase from last Friday’s close.
Does Ford Stock Look Like a Good Buy?
Despite testing investor patience in recent years, Ford’s modest valuations and a substantial dividend yield make F stock an appealing value buy candidate. With a price-to-earnings multiple of 8.4x and a dividend yield of approximately 5%, Ford presents an intriguing case for investors.