5 Things Ford Investors Will Be Looking at on Friday

By this time tomorrow, Ford Motor Co.’s first-quarter earnings report will be in the hands of investors and analysts, who will be digesting it to get a feel for what to expect from the company for the remainder of the year. Ford and the auto industry at large had an amazing run-up in 2013, which, although it was an integral part of helping re-track the economy, means that companies this year will be going up against some pretty tough comparable quarters.

Ford, though, seems up to the task. 2014 is scheduled to be one of the busiest years in the firm’s history, with 23 new global product launches slated to occur before 2015. This includes the nameplates that are the most important to the company: the Focus compact, the F-Series pickup, and the Mustang, which for the first time is getting some global action.

This strategy should theoretically keep Ford in growth mode over the next year or two, as the company still has lots of potential room for growth in international markets. Ford has only scraped the surface of the eligible market in China, and Europe — which has remained a muted opportunity throughout its long, arduous financial recovery — has yet to hit its stride.

Here are five things to look for once Ford releases its quarterly results before Friday’s bell.

1. North America driving Ford’s profits

With Ford’s Chinese market still developing, South America presenting problems, and Europe still on the road to recovery, North America will play a vital role in Ford’s profit generation. The fact that the U.S. is also Ford’s largest market for the F-Series pickup, which is a profit-making machine for the company, only furthers Ford’s reliance on strong domestic performance. Not being concerned about currency fluctuations on U.S. sales is an added plus.

However, given Ford’s spate of new model releases, the company’s operating margin is expected to fall to the 8 or 9 percent range for the quarter, Forbes reports — it stood at 9.9 percent at the end of 2013. “Ford’s sales were down 6 percent year-on-year in February in the U.S. and retail sales were down 4 percent,” Forbes said, though there’s a silver lining: “the Ford F-Series and Lincoln posted strong gains of 37 percent and 36 percent respectively.” The publication noted that the sales slide could at least partially be contributed to harsh winter weather, a trend that should ease moving into warmer months.

2. A slide in earnings per share

According to analyst estimates, Ford’s EPS is expected to come in at around 31 cents, about 24 percent below the 41 cents seen in the first quarter of 2013. But over the last four quarters, Ford has managed to surprise analysts and beat expectations, though it’s worth mentioning once again that last year was a very strong year for Ford.

Nonetheless, the EPS estimate of 31 cents is flat with the actual earnings per share recorded for the fourth quarter in December, when analysts were expecting 27 cents. If the first quarter — which has been admittedly trying for many — falls in line with the late months of last year, Ford’s EPS could land at least flat quarter-on-quarter, thanks to sustained demand for the F-Series.

3. Slight revenue growth

Ford has tacked on some really impressive growth over the last few years, but some observers speculate that Ford’s rate of growth will slow, despite a flood of new models worldwide. Revenue is expected to grow to $34.06 billion for the first quarter of this year, a 0.6 percent increase over the $33.86 billion haul that the company brought in during the year-ago period. 

This growth is expected to slow throughout the year, dipping to 0.1 percent during the second quarter, according to analyst estimates. The trend will continue through the year, with a somewhat meager 0.7 percent growth rate for 2014. Next year, armed with its slate of new cars, the company’s annual growth rate is expected to leap to 6 percent — but that’s far enough in advance that there’s plenty of time to change.

4. Continued improvement in Europe

Europe has been making a slow recovery since the collective economy tanked in the wake of 2008?s financial recession, but it is making a recovery. Though it sounded ambitious at first, Ford pledged to return to the black in the region by 2015, and its past quarterly reports have indicated that that’s very well possible. Plant closures and new products have been helping both Ford’s top and bottom-lines in the area, and European economies — especially Ford strongholds the U.K. and the fiscally strengthening Germany — have been making sound progress in getting back up to speed with global economic trends.

5. Continued growth in Chinese sales

Given Ford’s later entry into the Chinese market, there is still a lot of potential for the company in the world’s largest auto market. Case in point: While Chinese consumers have been snapping up Buicks and Cadillacs left and right, Ford has yet to launch the Lincoln brand there, which it will do over the next few months. Further, though Ford’s growth rates have been through the roof in China, the actual volume of vehicles sold relative to its peers (General Motors, Volkswagen) has been quite low, implying there’s a much larger pool that Ford can dive into.