Major benchmarks declined on Thursday as investors reacted to a number of disappointing quarterly earnings reports. The Dow Jones Industrial Average (^DJI 2.68%) and the S&P 500 (^GSPC 3.06%) both lost around half a percent.
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Ford's earnings decelerate
Shares of Ford fell 7.5% after the American automaker announced mixed second-quarter results and underwhelming guidance.
Ford's revenue was flat on a year-over-year basis at roughly $38.9 billion, including a 0.4% decline in sales from its core automotive business to $35.76 billion. Most analysts were expecting lower core automotive segment revenue of $35.17 billion.
That translated into a steep 86% decline in GAAP net income to $148 million, or $0.04 per share, albeit primarily due to costs related to restructuring activities in Europe and South America. Adjusted for those unusual items, Ford generated (non-GAAP) earnings of $0.28 per share, up $0.01 from last year's second quarter but well below the $0.31 Wall Street was modeling.
Looking to full-year 2019, however, Ford now expects adjusted earnings to range from $1.20 to $1.35 per share, down from $1.30 per share in 2018 and missing consensus estimates for $1.39.
Still, CEO Jim Hackett remained optimistic, stating he was "pleased" with Ford's progress "toward creating a more dynamic and profitable business."
"In this time of profound change in our industry," Hackett added, "Ford has amazing opportunities to delight customers, innovate and collaborate in new ways, and create value."
PayPal's mixed outlook disappoints
Shares of PayPal dropped 5.1% after the online payment solutions leader announced its own disappointing second-quarter results and reduced its full-year revenue outlook.
PayPal's quarterly revenue climbed 12% year over year to $4.31 billion, even after a 7-percentage-point impact from last year's sale of its credit portfolio to Synchrony Financial. On the bottom line, that translated into adjusted earnings of $0.72 per share (excluding a $0.14-per-share benefit related the value of its strategic investments). Analysts, on average, were expecting adjusted earnings of $0.74 per share on revenue closer to $4.33 billion.
PayPal also raised its full-year profit guidance to call for adjusted earnings of $3.12 to $3.17 per share, up from $2.94 to $3.01 previously, thanks in part to unrealized equity investment gains in the first half. At the same time, the company lowered its 2019 revenue outlook to call for growth of 14% to 15% year over year, or to a range of $17.6 billion to $17.8 billion, down from its previous forecast of $17.85 billion to $18 billion.
To blame, management says, are a combination of delays in partner product integrations and planned price increases, as well as the impact of the strong U.S. dollar on cross-border trade.