Ford Gets No Love From Wall Street After Topping Q2 Estimates

Despite recently playing an executive game of musical chairs, Ford Motor Company (NYSE: F) managed to turn in a solid second-quarter performance. Revenue and net income rose, the latter beat estimates, and the company pushed its full-year guidance higher. But since automakers still can't get any love from Wall Street, the stock moved 2% lower by midafternoon.

Regardless of the stock-price movement, it was a solid quarter. Here are some of the highlights and takeaways for investors.

By the numbers

Starting from the top: Ford's revenue inched higher during the second quarter to $39.9 billion, a $0.4 billion improvement over the prior year. Net income also crept $0.1 billion higher to $2.0 billion, with adjusted pre-tax profit hitting $2.5 billion. Adjusted earnings per share checked in four pennies higher than the prior year, to $0.56 per share, well above analysts' consensus estimates calling for $0.43 per share.

"This quarter shows the underlying health of our company with strong products like F-Series and commercial vehicles around the world, but we have opportunity to deliver even more. The entire team is focused on improving the fitness of the business and smartly deploying our capital to improve both the top and bottom lines in the quarters ahead," said Jim Hackett, president and CEO, in a press release.

Highlights and takeaways

Part of the driving force behind Ford's elevated numbers in the second quarter was tax-related. Ford's corporate tax rate dropped from about 30% down to 10%, and CFO Bob Shanks expects a 15% rate for the full year before it returns to 30% in 2018. That's also pushing Ford's full-year adjusted earnings guidance higher, to a range of $1.65 to $1.85 per share, compared with the previous guidance of $1.58 per share.

Ford's F-Series and Lincoln luxury lineup quietly posted strong quarters. In the U.S., the F-Series loaded up its best second-quarter sales performance since 2001 and logged average transaction prices of $45,400 per truck -- a staggering $3,100 increase from a year ago. Lincoln sold more than 29,000 units in the U.S. during the second quarter, which was its best performance in 10 years. Also, in China, Lincoln put the finishing touches on its best-ever quarter.

One of the biggest question marks facing Ford investors heading into the conference call was its European region. While competitor General Motors recently decided to bail out of the region, Ford plans to stick it out despite near-term headwinds. And while Brexit did negatively affect results, the company managed to log an $88 million pre-tax gain. That's a moral victory, even if the result was $379 million lower than the prior year. Ford expects to remain profitable for the full year.

Ford Credit also quietly had a strong quarter. In fact, it was Ford Credit's best quarterly pre-tax profit since 2011. The finance arm logged $619 million in pre-tax profit, which was a healthy $219 million improvement over the prior year. Ford now expects full-year pre-tax profit to exceed $1.5 billion, thanks to an improved lease residual value outlook -- which is welcome news.

Although Ford beat estimates and raised guidance, investors seem to be focusing on the rhetoric coming from both GM and Ford management that essentially said the second half of 2017 is going to be rougher and less profitable than the first six months were. Hackett has his work cut out for him as he formulates a plan to improve how Ford spends capital, markets its vehicle lineup, and addresses its overall investment strategies in smart-mobility projects.

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Daniel Miller owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.