Wall Street is growing impatient with Ford’s (F) slowness in structurally improving its profit margins.
“We believe a key focus of investors will be on Ford’s ability to improve its structural margins while also profitably transitioning towards secularly growing EV and ADAS [advanced driver assistance systems] related products,” Goldman Sachs analyst Mark Delaney wrote in a new client note.
The Street made its concerns heard in Friday’s trading session.
The legendary automaker’s stock fell 6% in the wake of a disappointing quarter for profits. Ford’s ticker page was the most viewed on the Yahoo Finance platform through midday.
Execs at the company pinned the blame on still-high costs of production for gas-powered autos and expenses associated with the shift to EV development, among other factors.
Here is how Ford performed in the fourth quarter versus Wall Street estimates:
Ford Earnings Overview
Revenue: $44.0 billion vs. $39.9 billion expected
Adjusted EPS: $0.51 vs. $0.62 expected
Adj. EBIT: $2.6 billion vs. $3.45 billion expected
Wins: 1) Sense of urgency by management on the need to cut costs; 2) Strong balance sheet.
Misses: 1) Ugly earnings miss, suggesting still overly optimistic Street estimates; 2) No. 1 in U.S. recalls over the past two years.
One positive from the quarter — if anything — was that Ford CEO Jim Farley was fired up on the earnings call.
Farley is credited with reviving the company’s image among Wall Streeters and the public, mostly through the debut of hot-selling EVs such as the Mach-E and F-150 Lightning. But the CEO acknowledged on the call that the 2022 profit performance was unacceptable and he and his team are “on it,” so to speak.
“Our fourth quarter and full-year financial performance last year fell short of our potential,” Farley told analysts. “And while we generated record cash flow, we left about $2 billion of profit on the table due to cost and especially continued supply chain issues. These are the simple facts. And to say I’m frustrated is an understatement because the year could have been so much more for us at Ford.”
Farley’s tone on costs was in stark contrast to that of rival GM (GM) earlier in the week. GM was generally seen as managing expenses well in the fourth quarter, with CFO Paul Jacobson telling Yahoo Finance Live (video above) the company is targeting $2 billion in cost cuts this year.
“The surprise Q4 miss [for Ford] will likely overshadow the guidance since the near-term story now becomes about proving execution,” Citi analyst Itay Michaeli wrote in a note. “We expect the shares to trade down and potentially stay range-bound until the May 22nd Investor Day. We continue to prefer GM and do not see much of an incremental read-across from Ford’s results.”
Yahoo Finance’s Pras Subramanian contributed to this story.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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Source: https://finance.yahoo.com/news/ford-stock-falls-as-wall-street-eyes-this-key-concern-after-earnings-183634227.html