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Ford Stock Surges To Seven Year High On Q3 Earnings Beat, Dividend Return

Ford boosted its full-year profit outlook, while reinstating its dividend, after a much stronger-than-expected set of third quarter earnings.

Ford Motor  (F) - Get Ford Motor Company Report shares surged to the highest level in more than seven years Thursday after the carmaker topped its larger rival, General Motors  (GM) - Get General Motors Company Report, with stronger-than-expected third quarter sales while boosted its full-year profit outlook.

Ford said adjusted earnings for the three months ending in September were pegged at 51 cents per share, a 15.4% decline from the same period last year but well well ahead of the Street consensus forecast of $27 cents per share. Group revenues, Ford said, fell 4.8% from last year to $35.7 billion, firmly ahead of analysts' estimates of a $32.5 billion tally. Ford will also pay a fourth quarter dividend of 10 cents per share on December 1.

For the full year, Ford said adjusted earnings for the full year would come in between $10.5 billion and $11.5 billion, up from its prior estimate of $9 billion to $10 billion. 

"To build this future and generate the margins and cash flow we need to fund Ford+, we had to turn around our automotive operations and improve our competitiveness," CEO Jim Farley told investors on a conference call late Wednesday. "Our results in the third quarter show we are making significant progress. In fact, companywide, we achieved an 8.4% EBIT margin, including 10.1% in North America. Those margins, I'll remind you, are in line with our targets for 2023."

"I believe we have the right plan to drive growth and unlock unprecedented value. You are already seeing a favorable change in the slope of our earnings and cash flow," he added. "There is more to come. Given the strength of our business this year, we are increasing our full-year adjusted EBIT guidance to between $10.5 billion and $11.5 billion."

Ford shares were marked 12.44% higher in early trading following the earnings release to change hands at $17.45 each, a move that could take the shares to the highest levels in more than seven years.

"The result is very encouraging, reminding us of better-than-expected earnings power, a solid capital allocation plan, and ultimately with the ability to fund the transition to an EV/AV/digital world," said Credit Suisse analyst Dan Levy. 

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Ford's larger rival, General Motors  (GM) - Get General Motors Company Report topped the Street's third quarter earnings forecasts prior to the start of trading, but stuck to its full-year profit forecast and cautioned that the global semiconductor shortage would likely last into the second half of next year.

GM said adjusted earnings for 2021 would likely "approach the high end" of its prior forecast of between $5.70 to $6.70 per share, or $11.5 billion to $13.5 billion 

Shares in the group ended the Wednesday session 5.3% lower at $54.34 each. 

Earlier this month, Ford said its overall U.S. vehicle sales were down 17.7% from last year at 156,614 units over the month of September. Truck sales, Ford said, fell 22.6% 83,554 units. Sales of its electrified cars, however, were up 91.6% from last year at 9,150 while reservations for the new electrified F-150 Lightning have topped 150,000.

Ford also managed to boost its overall inventory by 21,000 vehicles over the month, despite plant closures and delays linked to the global shortage in semiconductors, to reach a gross stock total of 236,000 units.