Ford Motor (F) joined General Motors (GM) with a mixed report for the third quarter Wednesday. But Ford hiked full-year guidance and reinstated its dividend, after GM guided toward the “high end” of its 2021 earnings forecast. Ford stock jumped late, while GM stock rose.
In Q3, the auto giants saw a fresh hit to production due to a worsening chip shortage, which largely spared Tesla (TSLA).
Estimates: Analysts expected Ford earnings to tank 59% year over year to 27 cents a share. Revenue was seen rising 1.9% to $38.213 billion.
Results: Ford earnings fell 21.5% to 51 cents per share. Revenue slid 5% to $35.683 billion.
But quarter over quarter Ford’s revenue, adjusted earnings before interest and taxes, and free cash flow were “”all sharply higher… driven by significant increases in semiconductor availability,” the company said in release.
And Ford touted a 50% sequential increase in orders – to more than 100,000 vehicles – as semiconductor volumes increase.
Ford will resume its regular stock dividend in Q4, it added. The automaker had suspended the 15-cent quarterly Ford stock dividend in March 2020, as the pandemic spiraled out.
In Q3, Ford’s new vehicle sales in the U.S. fell 27%, the company previously disclosed. But average transaction prices rose 13% to $51,460, according to Edmunds data, benefiting from higher demand for pickup trucks and SUVs. In China, Ford’s Q3 sales fell 9%. In Europe, its Q3 sales fell 35%.
Ford now sees full-year 2021 adjusted EBIT of $10.5 billion-$11.5 billion, up from $9 billion-$10 billion prior. It kept guidance for 2021 adjusted free cash flow of $4 billion-$5 billion steady.
Wall Street sees 2021 EPS of $1.57, FactSet says. But that was before the stronger-than-expected Q3 EPS figure.
Shares rose 4.8% to 16.25 late. Ford stock fell 2.6% to 15.52 in the regular session Wednesday. Ford stock topped a 16.55 buy point Oct. 21 but it’s back below the entry. Investors also could use the Oct. 21 intraday high of 16.70 as the start of a high handle, offering a 16.80 entry.
Ford stock could potentially an early entry from breaking the trend line of the handle on Thursday.
Estimates: Wall Street expected GM earnings to dive 65% year over year, to 98 cents per share, according to FactSet. Revenue was seen falling to $30.722 billion.
Results: General Motors earnings per share fell 46% to $1.52. Revenue tumbled nearly 25% to $26.779 billion.
“The quarter was challenging due to continuing semiconductor pressures,” CEO Mary Barra said in a statement.
But results benefited from strong pricing and mix of vehicles, she said. Weak vehicle sales were also offset by GM’s $1.9 billion deal with battery partner LG over Chevy Bolt EV recall costs and “very strong” results at GM Financial, the vehicle financing arm.
In Q3, GM’s new vehicle sales in the U.S., its biggest market, fell 32.5% amid factory shutdowns due to the chip shortage. But average transaction prices rose 16% to $50,550, according to Edmunds data, as it benefited from higher demand for pickup trucks. In China, GM’s Q3 sales fell 19%, also due to the global chip supply shortage.
Outlook: GM now sees full-year adjusted EPS approaching the “high end” of its prior $5.70-$6.70 guidance. Analysts expected $6.41, but that was before the strong Q3 EPS figure. GM’s forecasts implied a possible Q4 miss on operating profit
Shares rose a fraction late following Ford earnings, after closing down 5.4% to 54.26 in Wednesday’s stock market trading.
Much of the double-bottom base formed below the 50-day or 10-week line, a negative. And the relative strength line for GM stock is lagging, well below the consolidation peak. The RS line is the blue line in the chart shown. A rising RS line means a stock is outperforming the S&P 500 index.
Ford and GM are managing through the chip crisis while investing billions to develop electric vehicles. GM and Ford are building key EV alliances as well.
Fossil-fuel cars underpin current revenue and profits for traditional automakers. So their EV shift brings risk as well as the potential for big rewards.
The auto giants continue to speed up development of electric cars, as Tesla becomes a trillion-dollar company. Earlier in October, GM promised investors looking for the next Tesla that it would surpass that rival in EV sales in a few years. CEO Mary Barra reiterate that view in an interview with CNBC Wednesday.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
YOU MAY ALSO LIKE: