Ford, GM, Tesla, and other automakers are about to report earnings — here's what to look for (FCA, GM, F, TSLA, RACE)
Andy Kiersz
- Ford, GM, FCA, and Ferrari should all post profits — the question is whether they'll beat estimates.
- Analysts will be looking for guidance heading into the 2018 sales year, which could be weaker than 2017.
- Tesla could lose well over $3 per share for Q4.
The five automakers whose stock moves we follow closely at Business Insider are reporting earnings this week and into early February.
After a surprisingly solid 2017, with near-record sales in the US, the industry is preparing for a downturn, albeit a modest one.
Wall Street is also hungry for stories about the future of transportation. Wildly unprofitable Tesla saw its stock surge in 2017, reaching new heights, while Ford languished and made a CEO switch to help it focus on new technologies.
Here's what we'll be keeping an eye on:
Ford
CES
The Blue Oval, under new CEO Jim Hackett, has broken with Detroit custom and will report its full-year 2017 and fourth quarter results after the bell on Wednesday. That's when tech companies release earnings, and Ford wants to do everything possible to recast itself as a forward-thinking enterprise, despite booming sales of a product that's been around since the 1940s — the F-Series pickups — driving its results.
Analysts are expecting $0.39 per share in Q4, and the carmaker has posted a beat for every quarter in 2017. The strong finish to last year suggests that pattern might continue, but Ford also recently guided for lower profits in 2018 than expected.
With a stock price that has lagged its peers and the markets, Ford is in an odd position: steady profits and an ironclad balance sheet aren't being rewarded by investors. With a hefty dividend of nearly 5%, however, shares that look cheap, and a renewed message about electric vehicles and autonomous driving, Ford could see some upside in 2018.
General Motors
Bill Pugliano / Stringer
GM was in the same boat as Ford: booming sales of high-margin pickups and SUVs, consistent profits, but no movement on the stock price. Then a combination of buzzy tech announcements, better-than-expected sales of the electric Chevy Bolt, a far-reaching EV strategy, and some tough calls by CEO Mary Barra (mainly selling the money-losing Opel division) finally moved the Wall Street needle.
Analysts expect $1.32 per share for Q4. The carmaker also hasn't made any noises about 2018 being a lower-profit year, distancing itself from crosstown rival Ford.
Essentially, the big rivalry in the industry is shaping up to be between moneymaking GM and money-bleeding Tesla — the two are neck-and-neck for market cap, but Tesla sold 100,000 vehicles last year, while GM sold 7 million.
Fiat Chrysler Automobiles
Thomson Reuters
FCA has been riding the pickup-and-SUV wave and the stock was the best-performing name in the sector in 2017, up 121% over the last 12 months. Analysts expect $0.59 per share for Q4, but the real question swirling around FCA isn't how much money the company is making, it's who will replace CEO Sergio Marchionne when he retires in 2019.
Analysts will also be interested in any comments Marchionne makes about the strategic value of FCA's brands. At the Detroit auto show, he shot down ongoing rumors about selling Jeep to a Chinese buyer. But it would be tidy if he rides off into the sunset having transformed Chrysler, once bankrupt, into a highly desired and lucrative group of nameplates: Jeep, Ram, Dodge. Ironically, if he breaks up FCA, Chrysler might vanish due to a lack of vehicles wearing that badge.
Ferrari
Hollis Johnson
Analysts are looking forward to $0.67 per share for Q4. The prancing stallion is about to maybe, perhaps, possibly cross a threshold: if it sells more than 10,000 vehicles annually, it won't get a break any longer on emissions and fuel-economy regulations.
More sales, especially in developing markets, will help the bottom line, but Ferrari is also going to have to invest in newer hybrid-electric technologies for its cars. Marchionne is also CEO of the Italian company, and he's effectively committed the automaker to an SUV — or according to him, a "Ferrari Utility Vehicle" (FUV).
Ferrari's stock has boomed over the past year, but with some serious potential spending ahead, investors will be eager to get some insight into the 2018-and-beyond plan, which could be expensive.
Tesla
Mike Blake/Reuters
The market cap is about $60 billion, the stock went on a tear in 2017, Elon Musk just got a new pay package that guides the company to a $650-billion market cap — and the Q4 loss could be $3.75 per share, or more, with a full year loss of nearly $10 a share. There has been some chatter that the quarterly loss could be a billion bucks.
The stock price is still way up in early 2018, despite the troubled and delayed rollout of the all-important Model 3 sedan (the beginnings of full production were pushed back to June. Ahead of earnings, there's been no real dip, so you could argue that the staggering losses and the capital obliteration — over $1 billion per quarter at his point — are, well, somehow rationally priced in. Somehow.
In the context of Musk's new compensation deal, the conference call with analysts to discuss the results should be surreal.
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