Ford Motor Co. (F, Financial) beat expectations in its second-quarter 2017 earnings report, which was released July 26.
The well-known automobile manufacturer posted adjusted earnings per share of 56 cents, surpassing expectations of 43 cents. Revenue of $39.9 billion also beat estimates of $37.1 billion.
Despite the beat, the company’s shares were down 1.9% in premarket trading. As of Tuesday’s close of $11.27, the stock is down 7% year to date and has underperformed the broader market.
Ford said strong performance in its financing arm, higher truck sales and a lower-than-expected tax rate contributed to its performance.
While the company has been struggling with lower car sales in the U.S., sales of its F-Series line of pickup trucks gained 7% from last year, marking its best second-quarter sales performance since 2001.
Its luxury Lincoln brand also performed well in the U.S. and China. Although overall demand for sedans and passenger cars is declining in the U.S., Lincoln sold more than 29,000 vehicles in its home market during the quarter, its best performance in a decade. Lincoln sales in China rose a record 84%.
The auto company reported its net income of $2 billion was flat from a year ago. While North America drove profits, the businesses in Europe and Asia Pacific were also profitable.
CEO Jim Hackett said Ford’s performance during the quarter reflects the “underlying health” of the company as it has strong products. He feels it can continue to do more, however.
“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,” Hackett said.
The graph below illustrates the trend in the company’s revenue growth since Dec. 28, 2005.
The company said its tax rate for the year would be 15%, but it will increase to around 30% next year. Ford’s tax rate was about 31.9% in 2016.
As a result of its improved performance and a more favorable tax rate, Ford raised its full-year adjusted earnings guidance to between $1.65 and $1.85 per share.
Disclosure: I do not own any stocks mentioned.
