Please ensure Javascript is enabled for purposes of website accessibility

Will Ford Motor Company Stock Pop After Earnings?

By John Rosevear - Feb 2, 2021 at 7:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It was a messy quarter, but there could be a positive surprise.

Ford Motor Company (F 3.89%) will report its fourth-quarter and full-year 2020 earnings results after the market closes on Thursday, Feb. 4. Will it outperform Wall Street's expectations? 

What Wall Street expects

On average, Wall Street analysts polled by Thomson Reuters expect Ford to report an adjusted loss of $0.07 per share on automotive revenue of $33.84 billion.

Both results would be down from a year ago. Ford reported adjusted earnings of $0.12 per share on automotive revenue of $36.7 billion in the fourth quarter of 2019. 

(Wondering what those terms mean? Here's the Ford secret decoder ring: Adjusted figures exclude one-time charges and credits. Automotive revenue excludes revenue from Ford Credit, the Blue Oval's financial services subsidiary.) 

A 2021 Ford F-150 pickup truck.

Factory downtime needed to change over to the all-new 2021 F-150 hurt Ford's truck sales in the fourth quarter. Image source: Ford Motor Company.

Why Ford might do better 

Ford's fourth-quarter sales results were a mixed bag, with some strong results offset by ongoing COVID-19 effects and tight supplies of its top-selling F-150 pickups in the U.S.

  • Ford's overall U.S. sales fell 9.8% in the fourth quarter, but its higher-profit retail sales fell just 3.4%. The key factor in that decline was a shortage of F-150s caused by factory shutdowns required to change tooling for the all-new 2021 model. That hurt, with overall F-Series pickup sales down 15%. But retail sales of Ford's SUVs were up 9.8%, led by strong results for the higher-priced Explorer and Expedition. 
  • Ford's sales in China jumped 30% from a dismal year-ago result, powered by a 75% increase in sales of higher-priced Lincoln models. Ford now makes the Lincoln Aviator and Corsair SUVs in China (as well as in North America). Demand has been brisk. 
  • Ford's sales in Europe were down 15%, as new pandemic-related restrictions in the United Kingdom and Germany hurt showroom traffic. But sales of Ford Europe's best-seller, the Focus, held up well, dropping just 2.8% from a year ago. Ford also sold almost 40,000 units of its new Puma, a small, sporty crossover SUV. 

Expect some big one-time charges

Ford warned auto investors to expect some hefty one-time charges against its fourth-quarter earnings. These won't affect the "adjusted" figures, but they'll affect the bottom line. (Put another way: Ford will probably report a net loss for the quarter.) 

Here are the charges we know are coming:

  • $610 million to cover the costs of an airbag-related recall. This is a cash charge, meaning it's actual money that Ford is obliged to spend.
  • About $1.5 billion related to its pension funds to account for the fact that the investments in the funds fell in value in 2020. This is a noncash charge, meaning it's just accounting, not actual money. Ford took a similar charge a year ago. 
  • About $2.5 billion related to the closure of three factories in Brazil. Noncash charges will probably account for more than half of that total, but there will be a cash component as well.
A blue Ford Puma, a small sporty crossover SUV.

The Ford Puma was Ford's second-best seller in Europe in the fourth quarter. Image source: Ford Motor Company.

Will Ford's stock pop after earnings?

Here's my take: I think Ford will report OK-but-not-great operating results for the quarter because of the pickup shortage, and a net loss because of those one-time charges. I think there's a good chance that it will report a smallish per-share profit on an adjusted basis. That would beat Wall Street's estimate, but may or may not do much for the stock.

That said, I also think there's a good chance that Ford will give guidance for 2021 that is better than Wall Street currently expects, as its truck inventories get back to normal and its cost discipline starts to pay off. If so, that could definitely send the stock higher. 

We'll find out on Thursday afternoon.  

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
$13.63 (3.89%) $0.51

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.