Images

A 16.3% jump in U.S. F-Series sales may have helped drive Ford's margins and profits higher in the second quarter. Image source: Ford Motor Company.

Start your engines! Ford Motor Company (NYSE:F) will report its second-quarter earnings results before the bell this coming Thursday, July 28. Here's a look at what to expect. 

What Wall Street expects

Analysts polled by Thomson Reuters expect Ford to report earnings of $0.60 per share, on average. That would be a 28% jump from the $0.47 per share it earned a year ago

The analysts expect Ford's revenue to come in at $36.31 billion, up 3.4% from $35.1 billion a year ago. 

What to watch for: Will a jump in margins offset so-so sales growth? 

While Ford is expanding its operations around the world, the company's U.S. sales are still a tremendously important driver of the bottom line.  At first glance, Ford's second-quarter sales in its home market don't look promising, up just 1.2% from the second quarter of 2015.

But a deeper look reveals some promising trends. While Ford's car sales have been hurt as buyers have turned away from sedans and toward SUVs, the Blue Oval has also benefited from still-strong demand for SUVs and pickup trucks. In the U.S., sales of Ford-brand cars fell 17.3% in the second quarter, while Ford-brand SUV sales rose 3.4% and sales of Ford's F-Series pickup line jumped a heartening 16.3%.

Generally speaking, trucks and SUVs are more profitable than sedans, so that shift in buyer tastes is likely to drive a good profit for Ford in its North America business unit. Ford's Lincoln luxury brand is also likely to help: U.S. Lincoln sales rose 7.6% in the quarter. Luxury vehicles are almost always more profitable than their mainstream siblings. 

Long story short: The changing mix of sales in the U.S. could drive a year-over-year improvement in profit margin despite lackluster overall sales numbers.

Outside of North America, Ford's results were a mixed bag. After a very strong first-quarter result, Ford's sales in China slipped 2.2% in the second quarter. But in Europe, improving conditions and strong sales of Ford's profitable commercial-vehicle lineup drove a 6.4% sales gain in the second quarter.

The upshot: Despite so-so sales growth, an upside surprise is very possible

Wall Street analysts (and your humble Fool) were happily surprised when Ford trounced earnings estimates in the first quarter, more than doubling its year-earlier profit. Worries that a rise in low-profit rental-fleet sales would squeeze Ford's margins turned out to be unfounded: Strong sales of high-profit trucks and SUVs helped the company to an impressive overall 9.8% operating profit margin. 

Could we see Ford post a big improvement this time around on its year-ago 7.2% operating profit margin? We might, though it's worth noting that the second quarter of 2015 was also a happy surprise: A predicted jump in earnings driven by the then-new F-150 pickup arrived a bit earlier than investors had expected. Still, with average transaction prices still strong, incentives at reasonable levels, and no new overseas drama cropping up, it's quite possible that Ford's margin will jump -- and that its result will come in a bit ahead of Wall Street's optimistic estimate. 

John Rosevear owns shares of Ford. The Motley Fool owns shares of and recommends Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.