Home Mutual Funds Ford Stock Jumps on Strong Q4 Earnings and 2024 Outlook, News of Special Dividend

Ford Stock Jumps on Strong Q4 Earnings and 2024 Outlook, News of Special Dividend

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Key Takeaways

  • Ford reported adjusted earnings per share of 29 cents, more than double analysts’ expectations, and projected 2024 earnings at the higher end of forecasts.
  • Ford also announced a special 18 cents per share dividend to be paid in the first quarter.
  • Losses in the company’s electric vehicle business continued to mount, and are expected to widen further in 2024.
  • Ford shares rose more than 6% in after-hours trading.

Ford (F) shares rose more than 6% in after-hours trading Tuesday after the company reported better-than-expected fourth-quarter earnings, projected strong 2024 earnings and announced plans to return more cash to shareholders.

Ford posted earnings per share of 29 cents, down from 51 cents a share a year earlier but more than double analysts’ expectations. Fourth-quarter revenue rose 4% to $46 billion, also beating expectations.

For 2024, Ford forecast adjusted earnings of $10 billion to $12 billion before interest and taxes, compared to $10.4 billion in 2023. Those projections are at the higher end of the $10 billion to $10.5 billion the company predicted in November when it was hampered by a six-week strike from the United Auto Workers union.

The company projects profits this year of between $8 billion and $9 billion at its Ford Blue unit, which comprises gas and hybrid vehicles. It sees profit of $7 billion-$7.5 billion at its Ford Pro commercial business.

However, the company said its relatively small Ford Model e electric vehicle business is likely to post a loss of between $5 billion and $5.5 billion, as pricing pressures in the EV market continue to weigh on profitability. Losses for Ford’s investment-intensive electric vehicle unit have grown steadily over the past year and totaled $4.7 billion in 2023.

Ford noted in its press release that “mainstream customer adoption of EVs (is) happening at a slower rate than the industry expected” and reiterated that the company is “deferring certain capital investments in EVs until they’re justified by demand and prospects for acceptable returns.”

Nonetheless, according to Chief Financial Officer John Lawler, Ford is developing next generation EVs that the company expects will be profitable within a year of launch. “EVs are here to stay, customer adoption is growing, and their long-term upside is central to Ford,” he said.

Ford also announced a regular first-quarter dividend of 15 cents a share plus a supplemental dividend of 18 cents, to be paid on March 1. The company said it targets distributions to shareholders of 40% to 50% of adjusted free cash flow, which the automaker pegs at between $6 billion and $7 billion in 2024.

Ford shares gained 6.3% to $12.83 in after-hours trading. Through Tuesday’s close, the stock was down about 10% over the past year.

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