On Friday, JPMorgan reaffirmed its Overweight rating and $15.00 price target on Ford Motor Company (NYSE:F). The automotive giant's first-quarter earnings for 2024 were slightly below JPMorgan's high-end forecast but exceeded the consensus expectations.
Ford's management has indicated that the company's full-year results are anticipated to reach the higher end of their guidance, with the exception of free cash flow (FCF), which is now expected to surpass previous estimates due to reduced capital expenditure projections.
In the first quarter, Ford's earnings before interest and taxes (EBIT) amounted to $2.763 billion, which was lower than JPMorgan's estimate of $3.187 billion but higher than the consensus of $2.315 billion. This was attributed to weaker performance in the Ford Blue segment, somewhat balanced by stronger results from Ford Pro and consistent outcomes across other segments.
The overall automotive EBIT was $2.593 billion against JPMorgan's prediction of $3.134 billion. By segment, Ford Blue's EBIT was $905 million, Ford Pro's was $3.008 billion, Model e reported a loss of $1.320 billion, Ford Credit earned $326 million, and Mobility had a loss of $9 million.
Earnings per share (EPS) for the quarter were reported at $0.49, which was below JPMorgan's $0.54 estimate but above the consensus of $0.44. Ford's management has reiterated the full-year guidance for 2024, forecasting total company adjusted EBIT to be between $10.0 billion and $12.0 billion, with FCF expected to be between $6.50 billion and $7.50 billion.
This FCF outlook is an increase from the previous range of $6.0 billion to $7.0 billion and is higher than the consensus forecast of $5.73 billion, even if it aligns with JPMorgan's estimate of $7.1 billion.
The expected improvement in FCF is attributed to a reduction in capital expenditures by $0.5 billion, a move influenced by the current softer demand for electric vehicles (EVs) and a consequent decrease in near-term investment needs.
Segment-wise, Ford Blue is expected to report an EBIT of $7.0-$7.5 billion, Ford Pro $8-$9 billion, and Model e is projected to incur a loss of $5.5-$5.0 billion, in line with JPMorgan's expectations.
Adjusting for the slightly lower first-quarter performance but also factoring in the improved full-year outlook, JPMorgan now forecasts Ford's total company EBIT and EPS for 2024 to be $11.5 billion and $1.95, respectively, up from the previous estimates of $11.3 billion and $1.90.
The firm's estimates for 2025 EBIT and EPS remain unchanged at $10.5 billion and $1.75, respectively, as does the December 2024 price target of $15.00.
InvestingPro Insights
According to InvestingPro data, Ford Motor Company (NYSE:F) is currently trading with a market capitalization of $49.43 billion and a P/E ratio of 12.66, which reflects a value-oriented investment profile, especially when considering the adjusted P/E ratio for the last twelve months as of Q1 2024 at 8.66. This aligns with the InvestingPro Tip that Ford is trading at a low P/E ratio relative to near-term earnings growth. Furthermore, the company has shown a revenue growth of 7.54% over the last twelve months, indicating a steady upward trajectory in sales.
Investors may also find Ford's dividend yield of 6.3% particularly attractive, supported by the company's history of maintaining dividend payments for 13 consecutive years, as noted in another InvestingPro Tip. This robust dividend yield, combined with a significant dividend growth of 30.0% in the same period, could be a compelling reason for income-focused investors to consider Ford's stock.
For those seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into Ford's financial health, stock performance, and industry standing. Interested readers can find these insights by visiting InvestingPro's dedicated Ford page at https://www.investing.com/pro/F. Moreover, for those looking to subscribe, use the coupon code PRONEWS24 to get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable tips and data to inform your investment decisions.
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