Analyst Note
| David Whiston, CFA, CPA, CFE |We see no reason to change our Ford fair value estimate after incorporating the firm’s third-quarter results into our model. Adjusted EPS of $0.30 beat the Refinitiv consensus of $0.27. Ford announced on Sept. 19 that part shortages left about 40,000 partially built vehicles in the quarter, and that it expected total company third-quarter adjusted EBIT of between $1.4 billion and $1.7 billion. It also confirmed full-year guidance for EBIT at $11.5 billion to $12.5 billion. The actual third-quarter number came in at $1.8 billion, and a $2.2 billion working capital benefit for the quarter brought automotive adjusted free cash flow to $6.6 billion year to date. Ford had been guiding for full-year free cash flow as high as $6.5 billion, so it has increased free cash guidance to $9.5 billion to $10.0 billion on anticipated strong auto results and continued strong pricing from scarce inventory. It also expects to wholesale all 40,000 unbuilt vehicles in the fourth quarter. However, a full-year commodity and inflation headwind for items such as logistics and other raw materials is now expected at $9 billion, up from $7 billion last quarter. Management is guiding for full-year adjusted EBIT of about $11.5 billion.