Ford Motor (F) is one of the worst stocks in the S&P 500 Thursday, plummeting after the automaker fell short of earnings expectations for its second quarter.
In the three months ended June 30, Ford's revenue increased 6% year-over-year to $47.8 billion, buoyed by a nearly 6% rise in automotive revenue to $44.8 billion and a 19% jump in Ford Credit revenue to $3 billion. Meanwhile, its earnings per share (EPS) decreased 35% to 47 cents.
Pressure on Ford's bottom line was due in part to a $1.1 billion loss in its electric vehicle (EV) segment amid "ongoing industrywide pricing pressure on first-generation electric vehicles and lower wholesales."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The report also showed that Ford's free cash flow, which is the money left over after operating expenses and spending on assets, climbed 10% from the year-ago period to $3.2 billion.
"Customers exercising 'freedom of choice' made Ford the No. 1 gas, No. 2 electric and No. 3 hybrid vehicle brand in the U.S. and the company remains confident in full-year 2024 results, including increasing effectiveness generating cash," the company said in a statement.
The results were mixed compared with analysts' expectations. Wall Street was anticipating total revenue of $47.8 billion and earnings of 68 cents per share, according to MarketWatch.
As a result of its strong cash generation in the first half of the year, Ford raised its full-year free cash flow forecast. The company now anticipates free cash flow in the range of $7.5 billion to $8.5 billion, up from its previous forecast of $6.5 billion to $7.5 billion.
"Our $1 billion increase to adjusted free cash flow guidance for the year underscores our growing confidence in the business," Ford Chief Financial Officer John Lawler said on the company's conference call. "Our balance sheet remains strong with close to $27 billion in cash and $45 billion in liquidity, providing considerable flexibility in a very dynamic environment."
Is Ford stock a buy, sell or hold?
Wall Street is on the sidelines when it comes to Ford, which isn't too unsurprising given the consumer discretionary stock is down more than 18% in the past 12 months.
According to S&P Global Market Intelligence, the consensus analyst target price for F stock is $14.02, representing an upside of about 20% to current levels. Despite the significant implied upside, the consensus recommendation is a Hold. Analysts may very well revise their price targets lower following the earnings miss.
Financial services firm Bernstein is one of the few bullish firms on Ford stock with an Outperform rating (equivalent to a Buy) and a $16 price target.
Still, Bernstein analyst Daniel Roeska says that Ford investors are looking for better performance from the automaker in upcoming quarters. The analyst also notes that Ford did initiate any stock buybacks in the most recent quarter, which could be concerning to shareholders. "The team clearly believes in its mission, but investors likely need more stepping stones to buy into the strategy if they will not be compensated along the way," he adds.
Bernstein's $16 price target represents sits more than 40% above where Ford Motor stock is currently trading.
Related Content
-
‘Are You Better Off Than You Were 71 Days Ago?’ Cory Booker Marathon Senate Speech Highlights Tax DebateTax Policy A speech protesting Trump’s policies, including tax plans, breaks U.S. Senate records.
-
Stock Market Today: Stocks Are Mixed Before Liberation DayMarkets are getting into the freewheeling rhythm of a second Trump administration.
-
Stock Market Today: Stocks Are Mixed Before Liberation DayMarkets are getting into the freewheeling rhythm of a second Trump administration.
-
How to Invest in SportsIf it's springtime, Forbes is out with its annual list of baseball franchise values. The billions involved might make you wonder how to invest in sports.
-
Winning Strategies for Financial Advisers as Clients' Lives EvolveHow can the wealth management industry help make life transitions easier for the adviser and the client?
-
How Advisers Can Establish Relationships With HNW ProspectsThese strategies can help to build influence with high-net-worth individuals, who are often looking to an adviser for insight rather than solutions.
-
When Your Car Is Fixed, But You've Still Got the ProblemThis reader's experience with trying to get squealing brakes fixed under an extended warranty mirrors what others are experiencing these days.
-
Stock Market Today: Dow Rises 854 Points From Its Intraday LowIf there's one thing markets hate, it's uncertainty. But uncertainty is all they're getting these days.
-
Seven Questions to Ask When Evaluating Personal Loan OptionsTaking out a personal loan too hastily could lock you into unfavorable terms with an untrustworthy lender. Ask these questions before signing anything.
-
How Much Does Being Rich Matter in Retirement?After a certain point, having more money in retirement won't make you any happier, new research shows. Instead, physical health, a sense of purpose, and a minimal amount of non-mortgage debt are more relevant.
