Earnings preview: What to look for when Ford reports Q2 2019 results

Ford Motor Company (NYSE: F) is scheduled to report second quarter 2019 earnings results on Wednesday, July 24, after market close. Analysts expect earnings to climb 14.8% to $0.31 per share and revenue to decline by 2% to $35.17 billion. 

During the second quarter, Ford’s total vehicle sales in the US fell 4.1% year-over-year. Sales of trucks were up 7.5% while sales of SUVs dropped 8.6%. Car sales saw the highest decline of 21.4%. The decline in vehicle sales will have an impact on the company’s top line results in the second quarter.  

The changing trends in the industry and the shift towards trucks and SUVs have led Ford to prune its portfolio and discontinue certain unprofitable models. The company announced a major restructuring in Europe that saw several factory closures and job cuts. Cost savings from restructuring activities are likely to benefit earnings during the quarter.

Ford had to recall a couple of its vehicle models during the year due to various glitches. These recalls are likely to result in higher costs and take a toll on the company’s performance. On a positive note, Ford has partnered with Volkswagen AG for the development of electric and autonomous vehicles. As part of this alliance, Volkswagen will invest $2.6 billion in Ford’s self-driving unit Argo AI.

As the automobile industry moves towards electric and self-driving vehicles, Ford’s investments in this area can prove beneficial to the company going forward.

In the first quarter of 2019, Ford beat market estimates for revenue and earnings. Despite falling nearly 4% year-over-year to $40.3 billion, revenue came ahead of forecasts. Adjusted EPS grew 2% to $0.44. Revenue in the Automotive segment dropped 5%.

Ford’s shares have gained 28% so far this year and 5% over the past three months. Based on data from TipRanks, Ford has a 12-month average price target of $11.77.

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