Ford stock jumps as auto giant confirms outlook and raises dividend after second-quarter earnings crash

Ford (F) reaffirmed the outlook for 2022 and increased the Ford stock dividend on Wednesday night after smashing second-quarter earnings estimates. Ford stock jumped early Thursday.

Strong demand for traditional combustion vehicles and new electric vehicles is offsetting supply and inflation headwinds, the automaker said.




X



“We are moving with determination and speed into the most promising period of growth in Ford’s history,” Ford CEO Jim Farley said in an earnings statement late Wednesday.

Ford’s earnings follow another move by the Federal Reserve on Wednesday to rein in inflation. The Fed raised interest rates another 0.75%, which could make car loans, credit cards and home mortgages more expensive.


IBD Live: a new daily stock market analysis tool


Ford earns more than fivefold

Late Wednesday, Ford said second-quarter profits jumped 423% to 68 cents. Revenue jumped 50% to $40.19 billion, driven by “a 35% increase in wholesale shipments and favorable pricing and vehicle lineup.”

Wall Street expected Ford’s earnings to rise 244%, year over year, to 45 cents, according to FactSet. Total revenue increased 38% to $36.871 billion.

In the second quarter, the automaker generated free cash flow of $3.6 billion. It will raise the quarterly dividend on Ford shares to 15 cents per share from 10 cents.

Ford also recorded a loss in market value on its Rivian (RIVN) pile.

Ford ended the quarter with $29 billion in cash and $45 billion to fund its EVs and other growth initiatives. Ford’s new dividend is payable Sept. 1 to shareholders of record as of Aug. 11.

The lack of supply rather than demand is largely detrimental to automobile sales. But Ford’s second-quarter U.S. sales rose 1.8%, defying an industry double-digit decline. Sales fell 22% in China, amid a resurgence of Covid in the country and continued global supply chain disruptions.

Outlook: Ford on Wednesday maintained its 2022 guidance for adjusted EBIT of $11.5-12.5 billion, up 15-25% from 2021. It continues to forecast adjusted free cash flow of 5, 5 to 6.5 billion dollars. Analysts polled by FactSet expect Ford earnings of $1.92 per share for all of 2022, up 21% from a year ago.

Ford’s outlook assumes 10% to 15% growth in vehicle sales and still-high prices, offset by $4 billion headwinds in commodity prices. Ford now expects cost pressures totaling about $3 billion for the year, up $1 billion from the prior quarter.

Ford Stock Jump Late

Ford stock jumped 6.3% to 13.19 in premarket trading on the stock market today. Ford shares rose 5.2% amid a broad rally on Wednesday. Last week, Ford stock returned to the 50-day moving average for the first time since January.

GM shares gained 3.1% to 34.36 on Wednesday. GM on Wednesday missed second-quarter results but also stuck to its 2022 guidance. Ford’s arch-rival said it expects “significantly” higher production and deliveries in the second half. Tesla stock jumped 5.9%, extending its rally after a slump in Q2 last week.

The relative strength line of Ford stocks is improving after a fall. It rebounded strongly in the second half of 2021. A rising RS line means a stock is outperforming the S&P 500.

Shares of GM and Ford are down about half from their January highs and remain well below their 200-day averages.


Stocks run on Fed hints of slower rate hikes; Watch out for “Day 2”


Radical and risky electric vehicle change

About a week ago, Ford announced a series of battery supply moves to meet its ambitious goal of 600,000 electric vehicles per year by 2023 and more than 2 million electric vehicles per year by 2026. .

General Engines (GM) made similar announcements on Tuesday. Auto giants are trying to convince investors that they have the batteries needed to produce several million electric vehicles each year.

But You’re here (TSLA) continues to advance a mile.

By 2030, the American automobile giants Ford, GM and Stellar (STLA) all aspire to have half of their sales in electric cars, in a bold and risky shift away from traditional petrol and diesel vehicles.

Stellantis, the ex-Fiat Chrysler, reports early Thursday.

Ford’s new Lightning and Mach-E electric vehicles are doing well in the market. But competition is growing, with GM preparing to launch at least three more new electric vehicles in 2023, expanding its EV lineup that includes the Hummer truck and Cadillac Lyriq SUV. Starting the EV Rivian (RIVN), in which Ford still has a stake after the stock sale, has a new electric SUV due later this year.

But their change of VE comes at a difficult time. Automakers face multiple headwinds, from supply disruptions and material inflation to the specter of a U.S. and global recession.

In a sign of caution fueled by uncertainty, General Motors will slow hiring, joining tech giants making such a move, he said Tuesday.

However, Mercedes-Benz’s parent company Daimler (DDAIF), GM and Tesla have all recently reported pent-up demand and improved auto production in the coming months.

YOU MIGHT ALSO LIKE:

EV battery technology: the path to a breakthrough

These are the 5 best stocks to buy and watch right now

Stocks to watch: IPOs, large caps and top-rated growth stocks

Find the latest stocks reaching buy zones with MarketSmith

Why this IBD tool simplifies finding the best stocks

Leave a Comment