Ford’s Stock Stumbles as EV Hurdles Mount
Ford Motor Company (F), based in Dearborn, Michigan, specializes in creating and servicing a range of vehicles, including trucks, cars, vans, SUVs, and luxury Lincoln models. With a market capitalization of $43.6 billion, Ford also offers financing, leasing, and insurance services related to its vehicles.
Struggles Behind the Wheel: Ford vs. Market Performance
This past year has seen Ford’s shares lag significantly behind the overall market. In fact, F has risen just 13.9%, while the S&P 500 Index ($SPX) has surged by nearly 35.9%. So far in 2024, F’s stock has dropped by 7.9%, contrasting sharply with the SPX’s 25.8% increase.
Comparison with Transportation ETFs Shows Greater Disparity
When looking specifically at transportation stocks, Ford’s situation appears even more challenging. The First Trust Nasdaq Transportation ETF (FTXR) has climbed about 40.6% in the past year, and its year-to-date gains of 21.4% further highlight Ford’s struggles, as the automaker has experienced significant losses.
Tough Terrain in the EV Market
Ford’s difficulties have largely stemmed from its performance in both the electric vehicle (EV) sector and the traditional internal combustion engine market. This year, pre-tax losses in the EV segment are anticipated to reach approximately $5 billion, prompting the company to recalibrate its ambitious EV strategies. In Q4, management cited weaker consumer sentiment, changes in sales mix, and growing competition in the EV space as obstacles. Additionally, rising costs and warranty expenses have impacted Ford’s earnings prospects.
Quarterly Results Show Mixed Signals
On October 28, Ford shares gained more than 2% following the announcement of its third-quarter results. The company reported revenue of $46.2 billion, exceeding analyst expectations of $42.3 billion. Adjusted earnings per share (EPS) stood at $0.49, slightly above the forecast of $0.47.
Looking ahead, analysts predict a 9.5% decline in the company’s EPS for the fiscal year ending December, estimating it will fall to $1.82 on a diluted basis. In recent quarters, Ford’s earnings surprises have varied; it met or beat expectations in three of the last four quarters but fell short on one occasion.
Analyst Ratings Reflect Cautious Outlook
Out of 20 analysts covering Ford, the consensus rating is a “Hold,” based on five “Strong Buy” recommendations, 12 “Holds,” and three “Strong Sells.” This outlook has become less optimistic compared to last month when six analysts had rated it a “Strong Buy.”
On November 7, Bernstein downgraded Ford to “Market Perform” and set a price target of $11.
The average price target for Ford stands at $11.85, suggesting a 5.5% upside from its current trading levels. The highest price target among analysts is $19, representing a remarkable potential increase of 69.2%.
More Stock Market News from Barchart
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
