Why Analysts Don’t Expect Ford’s Revenues to Grow in 2016 and Beyond
Analysts Expect a Strong 1Q16 Earnings Report for Ford
Ford’s revenue estimates
Analysts are estimating Ford Motor Company’s (F) 1Q16 revenues to grow to $35.6 billion. This is 5.1% higher than $33.9 billion in 1Q15. Higher shipments of pickup trucks in North America could help the company to achieve higher revenues in 1Q16.
However, the revenue estimates for 2Q16 and 3Q16 also likely to reveal year-over-year declines of 1.7% and 6.1%, respectively. Now, let’s look at analysts’ estimates for Ford’s revenues in the coming year.
Revenue growth in the coming years
For fiscal 2016 and 2017, Ford’s revenues are estimated to be around $145.8 billion and $148.3 billion, respectively, marginally lower than $149.6 billion in 2015.
Analysts’ revenue estimates for Ford’s competitor General Motors (GM) also suggest a stagnation in its revenues. Analysts estimate GM’s revenues to remain steady at $151.8 billion in 2016, about 0.4% lower than in 2015.
Negative factors for revenues
Automakers such as Ford and General Motors (GM) have recently emphasized their need to lower fleet sales to improve their profitability. This move could result in expanded margins but at the same time, it is likely to take a toll on their revenues and market share.
Automotive fleet sales include the wholesale supply of vehicles to taxi companies, car rental companies, and public departments. Typically, margins from fleet sales are lower than retail vehicle sales. Therefore, cutting fleet sales and utilizing the vehicle manufacturing plant capacity to produce more profitable vehicles for retail customers may help to improve their margins.
Also, Ford’s performance outside the North American market has not been impressive lately. This factor is also quite similar to GM. In fiscal 2015, automakers (VCR) such as Ford, Fiat Chrysler Automobiles (FCAU), and Toyota (TM) reported less-than-expected sales growth in the Chinese auto market. Ford’s 2014 Chinese market sales grew by 19%, but this growth fell significantly to just 3% last year.
Continue to the next article for a look at what analysts are estimating for Ford’s 1Q16 margins.
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