Ford Analysts Break Down Q3 Earnings: 'Beat, Raise, Swagger'

Ford Motor Company F shares gained 8% on Thursday after the company reported a third-quarter earnings beat and surprisingly reinstated its dividend.

Ford reported third-quarter adjusted EPS of 51 cents on revenue of $33.21 billion. Both numbers topped consensus analyst estimates of 27 cents and $32.54 billion, respectively. Revenue was down 5% from a year ago.

Looking ahead, Ford raised its full-year adjusted earnings guidance from a range of between $9 billion and $10 billion to a new range of between $10.5 billion and $11.5 billion. The company reiterated its full-year free cash flow guidance of between $4 billion and $5 billion.

Management also said it expects the current automotive chip shortage to extend into 2022 and even potentially into 2023. Ford expects a 10% increase in wholesale vehicle volumes in 2022.

Most surprisingly, Ford surprised Wall Street by reinstating its quarterly dividend, which it suspended during the early stages of the 2020 pandemic.

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Voices From The Street: Morgan Stanley analyst Adam Jonas praised Ford for its “beat, raise, swagger” but remains skeptical of its 92% year-to-date stock gains.

“At this stage, at least, we feel some may view a dividend as a superfluous and unnecessary accouterment of the Ford turnaround and EV transition story,” Jonas wrote in a note.

Wells Fargo analyst Colin Langan said the strong numbers boost his confidence in Ford heading into an important 2022.

“We continue to see numerous catalysts including production recovery as semi capacity comes back, further updates on Argo AI, and new product launches,” Langan wrote.

RBC Capital Markets analyst Joseph Spak said Wall Street likely doesn’t appreciate Ford’s international traction.

“The confidence coming from Dearborn is brimming and while still a number of wildcards for 2022, we see potential for upside,” Spak wrote.

F Ratings And Price Targets:

• Morgan Stanley has an Underweight rating and $11 target.
• Wells Fargo has an Overweight rating and $19 target.
• RBC Capital has an Outperform rating and $17 target.

The stock is up 8.4% to $16.84 at publication time.