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Can Ford’s Q1 earnings beat spark a stock rally?

By: Invezz
jim cramer ford motor win in 2024

Ford Motor Co (NYSE:F), the American automotive titan, released its first-quarter 2024 earnings on Wednesday post-market closing. With a revenue surge of 1.3% y-o-y to $42.8 billion, a net income of $1.3 billion, and an adjusted EBIT of $2.8 billion, Ford’s performance has surpassed expectations, showcasing resilience and growth amidst a dynamic market landscape.

Commercial Division Leads the Charge

The standout performer for Ford in Q1 was its commercial division, Ford Pro, which witnessed a remarkable 36% revenue surge, reaching $18 billion. Bolstered by robust demand for Super Duty work trucks and Transit vans, Ford Pro reported an impressive EBIT of $3.0 billion, indicating the segment’s strong profitability and resilience.

Ford’s commitment to sustainable mobility was evident as hybrid vehicle sales surged by 36%, aligning with the projected full-year growth rate of 40% for 2024. While Ford’s electric vehicle segment, Ford Model e, reported a loss of $1.32 billion, the company remains undeterred in its pursuit of electrification.

Despite industry-wide pricing pressures, Ford continues to invest in EV technology, anticipating future improvements in costs while addressing top-line challenges.

Financial Strength and Outlook

Ford’s robust financial performance is complemented by its disciplined capital allocation and efficient operations. The company’s adjusted EBIT guidance remains unchanged for the full year, with expectations leaning towards the higher end of the $10 billion to $12 billion range.

Additionally, Ford anticipates generating free cash flow between $6.5 billion to $7.5 billion, up from the initial forecast, reflecting increased confidence in its financial outlook.

However, the question on investors’ minds currently is whether this earnings beat and efficient capital allocation result in a higher stock price. For that, we will have to turn to charts.

Breaking the $10-$16 range

Ford’s daily charts show that the stock suffered a dramatic downtrend between January and July 2022, which took it from close to $26 to near the $11 mark in a matter of those few months.

Since then, the stock has largely traded in a range for nearly the past two years with $10 being the lower end of the range and $16 being the higher end of the range. Going into earnings, the stock was trading in the middle point of this range at $13.

F chart by TradingView

Though it is expected to open up by 3% today, unless Ford’s stock breaks above $16, the stock can be expected to remain range-bound in the medium to long term. Short-term traders who want to take advantage of the Q1 earnings bump can do so by buying Ford at the opening today near $13.30 with a stop loss near last Friday’s low at $12.

If the stock keeps on marching upward, expect it to face resistance again near $16, where one can take profits.

The post Can Ford's Q1 earnings beat spark a stock rally? appeared first on Invezz

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