Ford stock was gaining after reporting earnings Wednesday.
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(ticker: F) managed to beat profit projections, just like its peer did, but Ford also raised full-year profit guidance, something GM couldn’t do. Ford edged out GM in another way too. It restarted its quarterly dividend payment to shareholders.
After the market closed Wednesday, Ford (ticker: F) reported earnings per share of 51 cents, $3 billion in operating profit, and $37.5 billion in sales. Wall Street was looking for EPS of 27 cents, $1.7 billion in operating income, and $38.2 billion in sales.
Ford stock was up about 9.4% at $16.97 in early trading Thursday.
Management’s financial guidance looks solid. Ford raised its full-year forecast for operating profit to a range with a midpoint of about $11 billion from a prior midpoint of about $9.5 billion. That implies $2.1 billion in fourth-quarter operating profit for the fourth quarter of 2021—some $100 million more than the $2 billion Wall Street had penciled in.
“We are creating a spring-loaded future as we emerge from the chip shortages and COVID constraints,” said CEO Jim Farley. “Spring-loaded” means he is waiting for production to rebound when parts become available. Ford wants to rebuild its dealers’ inventories, which are historically low.
RBC analyst Joe Spak noted management’s optimism in a post-earnings research report, raising his target for the stock price to $17 from $16. He rates the shares at Buy.
Total vehicle sales were down nearly 18% in the quarter, compared with a year ago. Year to date, the decline was 7%.
Most important might be the dividend news. Shareholders will get a 10 cent payout in the fourth quarter. The dividend had been suspended since March 2020; Ford had paid a quarterly dividend of 15 cents before.
“The dividend reflects our confidence in the improving run rate of the business and our ability to fund all of our calls on capital, including the growing investment in electrification and the trajectory of our Ford [strategic] plan,” said Chief Financial Officer John Lawler on the company’s earnings conference call.
Ford shares dropped 2.7% in regular market hours Wednesday after General Motors (GM) reported earnings Wednesday morning. GM’s earnings were better than expeced, but the company didn’t raise its forecast for full-year operating-profits. With the money GM had already made in the first nine months of the year, the implied fourth-quarter operating profit of about $1.1 billion to $2.1 billion looked light. Analysts had been projecting about $2.3 billion in fourth-quarter operating profit.
GM stock dropped 5.4% Wednesday, while the
declined 0.5%. The
Dow Jones Industrial Average
Semiconductors are the reason for the weakness. Both Ford and GM have been hurt as a worldwide shortage of chips constrains output. Both companies hope the situation improves in 2022.
Despite the production trouble, both stocks are doing well. GM stock is up about 30% year to date. As of Wednesday’s closing price of $15.52, Ford stock had gained about 77%.
Write to Al Root at [email protected]