Earnings Preview: Automakers Reporting The Next Two Weeks (F, HOG, GM, TSLA)

Photo Credit: Michael Kappel

Even with global volatility, the automotive industry is enjoying considerable gains and profitability while annual sales have reached pre-recession levels. Last year, drivers in the U.S. bought more cars than ever before, a remarkable turnaround for an industry on the verge of collapse 5 years ago. The historic free fall in oil prices have fueled car sales with consumers flocking towards gas guzzling SUV’s and trucks. The most immediate challenges that threaten the automotive sales are currency headwinds and wavering demand in emerging markets. From a manufacturing standpoint, the auto industry must evolve with major societal trend to remain relevant including a shift in consumer demand, increasing regulatory requirements and the need to integrate technology and data along the way. The outlook of the automotive industry still remains positive due to cheap gas, easy credit and an improving job market. American automakers, Ford, General Motors, Harley Davidson and Tesla all reports in the next two weeks and will set the tone for the state of the car industry.

Ford Motor Co. (F) | Reports January 28, Before Market Opens.

The Estimize consensus calls for EPS of $0.48 and revenue of $35.951 billion, reflecting a significant upward trend from the year prior. Compared to Q4 2014, this represents a projected YoY increase in EPS of 86%. 

What to watch: For an industry on the verge of collapse, the automotive industry has made a remarkable industry as U.S. car sales have reached pre-recession levels. After a favorable three months, Ford Motors is poised to report strong Q4 earnings. The Blue Oval has seen frequent upward revision activity as of late, indicating an earnings beat on the horizon. Ford has outperformed expectations posting an increase in sales of almost 8% from the year prior and a 10% increase in sales of its F-Series pickups. Thanks to cheap gas, consumers are flocking to gas guzzling trucks like the Ford F150, which happens to generate the highest margins for the automaker. Besides strong truck and SUV sales, Ford has produced promising results from their new and updated models, the Ford Edge and Explorer. In the past Ford’s products did not resonate overseas, however as of late, the Blue Oval has increased its market share in Europe. That said, South America and Asia prove to be a challenge for Ford because of difficult economic woes. Ford recently pulled out of Japan and Indonesia citing wavering market dynamics. On the bright side, a majority of Ford sales come in North America where the strength of the U.S. dollar has been more beneficial than harmful.