Ford’s Earnings Are Today. A Big Beat Is Far From Certain.

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The chip shortage has limited Ford’s production.

Photograph by Bill Pugliano/Getty Images

Ford Motor

is enjoying a renaissance, but that doesn’t mean everything will go right all the time.

The company is leaning into the electric-vehicle revolution, spending more money on development and setting big goals for EV production. Shares are up and investors appear pleased with the direction the company is headed in under its news CEO
Jim Farley.

It doesn’t hurt that car sales are booming as the economy emerges from the Covid-induced recession.

The company’s EV goals are great, but it will take basic business execution to keep the stock moving higher in coming months. Investors will hear more about both the near- and long-term trends when

Ford Motor

(ticker: F) reports its first-quarter earnings on Wednesday evening.

Ford earned 34 cents a share from $36 billion in sales during the fourth quarter. Analysts, back then, were projecting a loss. Better profit margins in the auto and credit businesses helped surprise analysts and investors.

Another earnings beat isn’t assured. For the first quarter, Wall Street is looking for 22 cents in per-share earnings from $36.1 billion in sales, but Ford faces headwinds from higher costs for raw materials, as well as the global semiconductor shortage. Steel prices, for instance, are up almost 50% year to date. And the chip shortage has hurt auto production, limiting the number of cars Ford can sell to dealers. Inventories at dealerships are low because auto makers are having trouble churning out vehicles.

The chip shortage hasn’t hurt the stock yet. Ford shares are up about 42% year to date, far better than the comparable returns of the

S&P 500


Dow Jones Industrial Average.

Shares dipped briefly in mid-April as auto and chip companies updated investors about the shortage, but investors continue to view the issue as a passing phenomenon.

Ford addressed the chip shortage on its first-quarter conference call, saying it would allocate chips to higher value vehicles if it came to that.

Given all the positives, such as demand, and negative factors such as parts shortages, it isn’t clear whether Ford can maintain or boost its financial forecasts for the full year. Back in February, the company told investors to expect about $7.6 billion in 2021 operating profit, while Wall Street is projecting roughly $7.9 billion.

Wall Street, for the moment, is more optimistic than the company. That is a point worth watching.

Ford hosts a conference call to discuss results at 5 p.m. Eastern time. The full-year outlook will be one focal point. News about EVs will be a second one. Ford plans to spend billions on EV development and hopes to be selling only EVs in Europe by 2030.

Write to Al Root at

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