Ford Q1 2021 Earnings Report: Truck Sales Surge and Revenue Growth Insights

Spotlight on Ford's U.S. Truck Sales Performance

Key Highlights

• Analysts forecast adjusted EPS of $0.20 for Q1 2021, a strong rebound from -$0.23 in Q1 2020.
• Ford’s U.S. truck sales have shown significant year-over-year growth.
• Company-wide revenue is projected to increase modestly compared to last year.

Ford Motor Company (NYSE: F) is navigating unexpected hurdles as it strives to become a leader in automotive technology during the ongoing pandemic. In late 2020, Ford unveiled an ambitious $22 billion, five-year investment plan targeting electric vehicles and autonomous driving innovations. However, a global semiconductor shortage has forced temporary shutdowns at several manufacturing plants, impacting production and sales.

Investors will closely monitor Ford’s Q1 2021 earnings announcement on April 28, 2021, after market close, to assess how the company is managing these challenges. Analysts anticipate Ford will report its third consecutive quarter of adjusted earnings per share (EPS) growth following losses in the same quarter last year. Additionally, revenue is expected to see a slight year-over-year increase, marking only the second such rise in the past nine quarters.

A critical focus will be on Ford’s total U.S. truck sales, a highly profitable segment for the automaker. Recently reported figures indicate the strongest year-over-year growth since Q4 2019, underscoring the company's strategic shift towards trucks and SUVs.

Despite some volatility in earnings and revenue, Ford's stock has outperformed the broader market significantly over the past year. Since May 2020, the stock has gained momentum, culminating in a 141.6% total return over the last 12 months compared to 45.5% for the S&P 500 as of April 27, 2021.

Ford’s Earnings Journey

Before the COVID-19 pandemic, Ford consistently reported adjusted EPS between $0.40 and $0.44 in fiscal Q1 from 2017 to 2019. The pandemic disrupted this trend, resulting in adjusted losses in the first half of FY 2020. However, Ford rebounded in Q3 FY 2020 with an adjusted EPS of $0.65, its highest in over 15 quarters. For Q1 FY 2021, analysts project an adjusted EPS of $0.20, signaling continued profitability albeit at a lower level than the previous two quarters.

Revenue growth has been more challenging, with declines in seven of the past eight quarters. The exception was Q3 FY 2020, which saw a modest 1.4% revenue increase year-over-year. Revenue fell sharply by 14.9% in Q1 FY 2020 and plummeted 50.1% in Q2 FY 2020 amid pandemic disruptions. For Q1 FY 2021, a slight revenue increase of 1.6% is anticipated.

Source: Visible Alpha; Ford Motor Co.

Focus on U.S. Truck Sales

Investors will pay particular attention to Ford's U.S. truck sales, the company's most lucrative vehicle segment. Ford produces a diverse lineup including the F-150 series, Ranger, and Super Duty trucks, which generally offer higher profit margins than smaller vehicles. The automaker has strategically shifted towards trucks and SUVs to boost profitability.

In FY 2020, Ford experienced year-over-year declines in U.S. truck sales in every quarter except Q3, which saw a slight 0.6% increase. The steepest drop occurred in Q2 FY 2020, with sales falling 26.6% year-over-year. However, Q1 FY 2021 marked a 5.1% year-over-year increase in truck sales, the largest gain in five quarters.

While total vehicle sales, including trucks, cars, and SUVs, rose by just 1% in Q1, this performance exceeded analysts' expectations, which had predicted a decline. This suggests that the market outlook for Ford’s vehicle sales in Q1 FY 2021 was more pessimistic than warranted.

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