Analyst consensus ahead of Ford fourth quarter results due out tomorrow (28 January, 2014) is earnings per share of US$0.28 ($0.31 last year) on revenue growth of 2%, investor website seekingalpha.com said on Monday.
In an article titled Earnings Preview: Mid-December ’13 Guidance For 2014 Was A Shocker, contributor Brian Gilmartin noted: “To be blunt, the guidance Ford gave on 18 December, 2013 was a shocker: coming into that morning, consensus analyst expectations for calendar 2014 was that Ford would earn $1.85 per share.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
“Following the guidance, the 2014 forward estimate fell to $1.43, or a drop of 22% in the 2014 EPS consensus.
He said Ford explained reduced 2014 expectations with product launch costs for year up $1.5bn, as 20 new models are planned for launch world wide “which translates into $0.36 – $0.37 per share or roughly 90% of the EPS share reduction”; and extra $300m booked in Q4 2013 for Escape warranty costs, “which helped lower the Q2 2013 estimate from $0.37 to the $0.28 per share currently expected for Q4 2013”; and South American currency instability which was “an issue as far back as mid-December, which contributed to a weaker 2014 forecast. The news last week of the Argentinian peso devaluation only validated Ford’s December caution.”
“That is the problem with manufacturers like Ford that have a high degree of operating leverage: revenues look fine, but the change in costs has resulted in a big swing in EPS,” Gilmartin said.
He added: “We remain long all of our Ford position since we learned with Europe this year that management tends to guide severely and then outperform. On the Q4 2012 conference call in early 2013, Ford guided to a $2bn or $0.50 per share loss in Europe for 2013, when in fact as of the Q4 2013 [call], Ford’s year to date loss was just $1bn in the first nine months.
“As it stands today, per ThomsonReuters consensus, Ford’s EPS is expected to decline 8% in 2014 on 1.5% revenue growth.”
