Ford stock falls as Wall Street keeps an eye on this key post-earnings issue

Wall Street is getting more impatient about Ford’s (F) slowness in structurally improving its earnings.

“We believe that the main focus of investors will be on Ford’s ability to improve its structural margins, as well as profitably transitioning to ever-growing electric vehicles and ADAS. [advanced driver assistance systems] related products,” Goldman Sachs analyst Mark Delaney wrote in a new client note.

Street voiced its concerns in Friday’s trading session.

Shares of the legendary automaker fell 6% after a disappointing quarter in earnings. Ford’s ticker page was the most viewed on the Yahoo Finance platform before noon.

Company executives blamed the still-high production costs of gas-powered vehicles and the costs associated with the switch to electric vehicle development, among other factors.

Here’s how Ford fared in the fourth quarter compared to Wall Street estimates:

Ford earnings review

  • Income: $44.0 billion vs. expected $39.9 billion

  • Adjusted earnings per share: $0.51 vs $0.62 expected

  • App. EBIT: $2.6 billion vs. expected $3.45 billion

  • Wins: 1) Awareness by management of the urgency of the need to cut costs; 2) Strong balance.

  • Misses: 1) The appalling lack of revenue, reflecting Street’s still overly optimistic valuations; 2) #1 reviewed in the US over the past two years.

One of the positives of the quarter – if anything – was that Ford CEO Jim Farley was buoyed by the earnings report.

Ford CEO Jim Farley speaks during the official launch of the all-new Ford F-150 Lightning electric pickup truck at the Ford Rouge Electric Vehicle Center in Dearborn, Michigan, USA April 26, 2022.  REUTERS/Rebecca Cook

Ford CEO Jim Farley speaks during the official launch of the all-new Ford F-150 Lightning electric pickup truck in Dearborn, Michigan, USA April 26, 2022. REUTERS/Rebecca Cook

Farley is credited with reviving the company’s image among Wall Streeters and the public, largely through the debut of popular electric vehicles such as the Mach-E and F-150 Lightning. But the CEO admitted in a phone call that earnings figures in 2022 were unacceptable, and he and his team are “getting down to business,” so to speak.

“Our fourth-quarter and full-year financials last year were below our potential,” Farley told analysts. “And while we generated record cash flow, we left close to $2 billion in profits on the table due to costs and especially ongoing supply chain issues. These are simple facts. And to say I’m disappointed is an understatement, because it could have been a much bigger year for us at Ford.”

Farley’s tone on costs was starkly different from that of rival GM (GM) earlier in the week. GM was generally thought to be doing well on its fourth-quarter spending, with CFO Paul Jacobson telling Yahoo Finance Live (video above) that the company plans to cut $2 billion in spending this year.

Cabin of a Ford F-150 Lightning all-electric truck prototype on an automated guided vehicle (AGV) at the Rouge Electric Vehicle Center in Dearborn, Michigan, USA, September 16, 2021. REUTERS/Rebecca Cook

The cockpit of a Ford F-150 Lightning all-electric truck prototype on an automated guided vehicle (AGV) in Dearborn, Michigan, USA on September 16, 2021. REUTERS/Rebecca Cook

“Unexpected miss Q4 [for Ford] likely to eclipse management as the short-term story now boils down to proof-of-performance,” Citi analyst Itai Michaeli wrote in a note. “We expect the stock to trade lower and possibly remain in a range until May 22nd Investor Day. We continue to favor GM and see no significant difference between Ford’s results.”

Yahoo Finance Pras Subramanian contributed to this story.

Brian Sozzi is the editor-in-chief and Lead at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and beyond LinkedIn.

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