Ford Motor Co. (F) is set to report FQ4 2013 earnings before the market opens on Tuesday, January 28th. 2013 was a hallmark year for Ford, the American automaker crushed analyst projections in each quarter and the stock price was up over 15%. While Ford performed well, it was a great year for US equities across the board, the Dow Jones Industrial Average returned 26.5% in 2013.
One of the ways that Ford has been able to stay ahead of the game in the auto industry is by continuing to innovate. This year Ford announced that starting in 2015 they will be replacing steel in the F-150 trucks with aluminum. The new almost entirely aluminium F-150 trucks will be about 700 pounds lighter than existing models, making them much for fuel efficient. Social concern and purely economic factors (cost of gasoline) are both strong motivators for automakers to battle on creating highly fuel efficient vehicles at the most effective possible cost. While the new aluminum F-150s are still a year down the road, here’s what the buy-side is projecting for Ford this quarter.
The information below is derived from data submitted to the Estimize.com platform by a set of Buy Side and Independent analyst contributors.
The current Wall Street consensus expectation is for Ford to report 28c EPS and $35.455B revenue while the current Estimize.com consensus from 39 Buy Side and Independent contributing analysts is 32c EPS and $35.653B revenue. This quarter the buy-side as represented by the Estimize.com communtiy is expecting Ford to beat the Wall Street consensus on both profit and revenue.
The magnitude of the difference between the Wall Street and Estimize consensus numbers often identifies opportunities to take advantage of expectations that may not have been priced into the market. In this case we are seeing a large differential between the 2 groups’ forecasts.
Over the previous 6 quarters the consensus from Estimize.com was more accurate in forecasting Ford’s profit every time and was more accurate in predicting revenue 5 times. By tapping into a wider range of contributors including hedge-fund analysts, asset managers, independent research shops, students, and non professional investors Estimize has created a data set that is up to 69.5% more accurate than Wall Street, but more importantly it does a better job of representing the market’s actual expectations. It has been confirmed by an independent academic study from Rice University that stock prices tend to react with a more strongly associated degree to the expectation benchmark from Estimize than from the Wall Street consensus.
The distribution of estimates published by analysts on Estimize range from 28c to 40c EPS and $35.084B to $36.125B in revenues. This quarter we’re seeing a large distribution of estimates compared to previous quarters, especially on EPS.
The size of the distribution of estimates relative to previous quarters often signals whether or not the market is confident that it has priced in the expected earnings already. A larger distribution of estimates signaling less agreement in the market, which could mean greater volatility post earnings.
The Wall Street EPS consensus fell throughout the quarter from a starting point of 33c to 28c. The Wall Street revenue consensus also dropped throughout the quarter from $35.870B to $35.455B. The Estimize EPS consensus slipped from 35c to 32c and the Estimize revenue consensus inched up from $35.562B to $35.653B. Timeliness is correlated with accuracy and at the very end of the quarter we saw both groups revise their estimates downward.
The analyst with the highest estimate confidence rating this quarter is WallStreetBean who projects 33c EPS and $35.600B in revenue. In the Winter 2014 season, WallStreetBean is currently ranked as the 17th best analyst and is ranked 9th overall among over 3,500 contributing analysts. Estimate confidence ratings are calculated through algorithms developed by deep quantitative research which looks at correlations between analyst track records and tendencies as they relate to future accuracy. In this case the highest rated estimate is forecasting Ford to beat the Street by a wide margin on both EPS and revenue.
It’s been over 100 years since Ford first rolled the Model T off the assembly line, and they are continuing push the envelope in 2014. Investors and analysts have high expectations for Ford this quarter and are confident the company can continue to beat Wall Street expectations into the near future.
Get access to estimates for Ford published by your Buy Side and Independent analyst peers and follow the rest of earnings season by heading over to Estimize.com. Register for free to create your own estimates and see how you stack up to Wall Street.