Ford Anticipates Weak 2018, Pins Hope On Launches For 2019

In the recently announced preliminary results, Ford Motor Company (NYSE:F) stated that it expects weaker fourth-quarter and 2018 earnings, owing to high costs, economic volatility in China and struggling vehicle sales in Europe. In fact, the company projects that the same headwinds might impact earnings in 2019.

The automaker anticipates adjusted earnings of 30 cents per share and quarterly revenues of $41.8 billion for fourth-quarter 2018. For 2018, it expects revenues of $160.3 billion and adjusted earnings of $1.30 per share. The recently announced earnings expectation is at the lower end of the previous operating earnings projection of $1.30-$1.50 per share. Ford is scheduled to announce 2018 earnings on Jan 23.

Amid its business restructuring plan, the company expects earnings and revenues to improve in 2019. However, steel and aluminum tariff-related costs are anticipated to cut yearly profits by roughly $700 million. Further, a no-deal Brexit and a fluctuating U.S. trade policy are likely to have adverse impacts in 2019. This U.S. automaker didn’t disclose the complete forecast for the current year.

Ford Motor Company Price and Consensus

Amid such turmoil, Ford sees decent prospects with its set of new launches that are likely to generate increased operating earnings, revenues and adjusted operating cash flow in 2019. Between 2019 and 2023, the company set a target to invest 90% of funds for developing trucks and SUVs. Further, its restructuring plan, likely economic recovery in China and redesigning European operations are expected to contribute to Ford’s earnings in 2019.

Price Performance

Over the past three months, shares of Ford’s have declined 1.6% against the industry’s increase of 15%.

Zacks Rank & Stocks to Consider

Ford currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader auto sector are Bridgestone Corporation (OTC:BRDCY) , American Axle & Manufacturing Holdings, Inc. (NYSE:AXL) and General Motors Company (NYSE:GM) . Bridgestone and American Axle presently carry a Zacks Rank #2 (Buy) while General Motors sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bridgestone has an expected long-term growth rate of 4.7%. Share price of the company has increased 3.2% in the past three months.

American Axle has an expected long-term growth rate of 8.1%. Over the past month, shares of the company have gained 26.2%.

General Motors has an expected long-term growth rate of 8.5%. Shares of the company have gained 22.6% in the past three months.

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