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Ford Earnings: Pricing Eases UAW Strike Damage

We think Ford can handle most bad 2024 macroeconomic news without sacrificing investing for the future.

The Ford Mustang Mach-E GT SUV on display.

Key Morningstar Metrics for Ford Motor

What We Thought of Ford Motor’s Earnings

Ford Motor’s F stock rose over 6% during after-hours trading on Feb. 6 after the firm reported a good fourth quarter despite the United Auto Workers strike costing about $1.6 billion in quarterly profit. Adjusted diluted earnings per share of $0.29 far exceeded the $0.14 LSEG consensus but fell 43% year over year, while adjusted free cash flow excluding Ford Credit was still $2 billion, down from $2.4 billion. We are not changing our fair value estimate, but we will reassess all modeling inputs after the 10-K is filed.

Ford initiated 2024 guidance of total company adjusted EBIT of $10 billion-$12 billion, which at the midpoint is down from 2023′s $12.1 billion, excluding the full-year $1.7 billion strike impact. We agree with management’s assumption for the year of flat to modestly higher U.S. industry auto sales and lower pricing than in 2023. Ford expects a 2% pricing decline and capital spending of $8 billion-$9.5 billion, with 40% of that on electric vehicles.

2024 will also be the second straight year with a supplemental dividend. The 2023 payout was for Ford exiting its Rivian investment, but 2024′s $0.18 per share payout (about $720 million in aggregate) on March 1 is to boost the firm’s payout ratio and give shareholders some of the company’s large automotive cash balance of $28.7 billion. With this much cash and credit lines giving over $46 billion of year-end total automotive liquidity, we think Ford can handle most bad 2024 macroeconomic news without sacrificing investing for the future.

The Model e EV segment lost $4.7 billion in 2023, and 2024 guidance is for it to lose another $5 billion to $5.5 billion. We don’t expect meaningful growth from volumes in this segment until second-generation EVs come out in 2026. Until then, we anticipate large losses as the Blue Oval City plant is built and new vehicles are developed. We have high expectations for the product, given CEO Jim Farley’s repeated rhetoric about how good these vehicles (including a pickup truck) will be.

Ford Stock Price

Data as of Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

David Whiston

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007.

Before Morningstar, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner. In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011.

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