What To Expect From Ford’s Q3 Results?

Ford stock (NYSE:F) is expected to publish its Q3 2024 results in the coming weeks, reporting on a quarter that saw the company’s delivery growth slow considerably in the U.S. We expect Ford to report revenue of about $41.7 billion, marking a modest increase of about 1% compared to last year, while earnings are likely to come in at about $0.51 per share, slightly ahead of consensus estimates and up about 40% compared to last year. Now, Ford stock has underperformed this year, falling by about 7% year-to-date, compared to fellow U.S. auto giant GM (NYSE:GM) which has gained close to 35% over the same period. So what are some of the trends that could drive Ford’s results for the quarter? See our analysis of Ford Earnings Preview for a closer look of the key drivers of Ford’s earnings.

Ford’s U.S. sales increased slightly to 504,039 units in Q3, marking just a 1% rise compared to the 7% growth from the same period last year. High interest rates have made vehicle financing increasingly costly, curbing consumer demand. The pandemic-fueled pricing power automakers once enjoyed is also waning as U.S. consumer spending softens. Despite these headwinds, Ford outperformed the broader U.S. automotive market, which saw a 2% drop in volumes, driven in part by strong hybrid and electric vehicle sales. Hybrid sales, in particular, surged 38% to 48,101 units, while electric vehicle sales grew by 12%. Notably, Ford’s truck deliveries rose 6% year-over-year.

While there are concerns regarding the broader automotive market, Ford has a couple of positives that could drive future performance. One key shift is the company’s more balanced approach to electric vehicles. Previously, the slow pace of Ford’s EV transition weighed on the stock, but this is now easing. Ford’s revised strategy—focusing on a diversified portfolio of gas, hybrid, and electric vehicles—positions it well to meet evolving consumer preferences without over-committing to costly EV development. This strategy could help to improve profitability, as slower EV growth across the industry allows Ford to optimize its traditional segments while gradually refining its electric offerings.

Separately, recent changes to U.S. monetary policy could also provide a tailwind. Last month, the Federal Reserve implemented its first rate cut in nearly four years, reducing the benchmark federal funds rate by 50 basis points to a range of 4.75% to 5%. With room for further rate reductions, lower borrowing costs may stimulate demand for big-ticket purchases such as vehicles, benefiting automotive players such as Ford. Check out our analysis of other ways to profit from the Fed’s next move?

We value Ford stock at $14 per share, about 28% ahead of the market price.  See our analysis on Ford Valuation: Expensive Or Cheap for more details on what’s driving our price estimate for Ford.  For more information on Ford’s business model and revenue trends, check out our dashboard on  Ford Revenue: How Ford Makes Money.

While investors have their fingers crossed for a soft landing by the U.S. economy following rate cuts, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

[1] Returns as of 9/30/2024
[2] Cumulative total returns since the end of 2016

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