Retail favorite Ford soars 13% to 7-year high after strong earnings help automaker reinstate dividend

October 28, 2021

Retail favorite Ford soars 13% to 7-year high after strong earnings help automaker reinstate dividend

The 2021 Ford Bronco Badlands at Mudfest. — The 2021 Ford Bronco Badlands.
Doug Berger for NWAPA

Ford stock surged as much as 13% to a seven-year high on Thursday following a strong Q3 earnings report.
Strong results from the automaker allowed its quarterly dividend of $0.10 per share to be reinstated.
Ford is a favorite with retail investors, as it's one of the most widely held stocks on Robinhood.

Ford, a retail favorite that is one of the most widely held stocks among Robinhood's 22 million users, soared as much as 13% to a seven-year high on Thursday.

The move higher was driven by a strong third-quarter earnings report that beat analyst expectations and included a raise in guidance as well as a reinstatement of its quarterly dividend. Ford will once again pay $0.10 per share beginning in the fourth quarter.

The No. 2 US automaker had suspended its dividend in May 2020 amid uncertainties surrounding the COVID-19 pandemic.

Here are the key numbers:

Automotive Revenue: $33.2 billion, versus analyst estimates of $32.5 billion
Adjusted earnings per share: $0.51, versus analyst estimates of $0.27

Much of the strength in Ford's earnings was driven by an ease in supply-chain disruptions, which have been dominated by the ongoing semiconductor shortage. The company also saw a jump in wholesale vehicle shipments and strong demand for its electric vehicle lineup.

The automaker raised its 2021 adjusted EBIT to $10.5 billion-$11.5 billion from its prior view of $9 billion-$10 billion. And Ford's strengthening free cash flow will help the company fund $40 billion-$45 billion in capital expenditures over the next five years, much of which will go towards electric vehicle technology.

"We believe the setup into next year is favorable on the whole, particularly in the context of a relatively new (and judging by certain model reservations, highly anticipated) product lineup, still lean inventories further supporting pricing, and the expected benefits from prior global redesign actions," JPMorgan said in a note on Thursday.

The bank rates Ford stock at "Overweight" with a $20 price target, representing potential upside of 18% from current levels. Shares are up more than 90% year-to-date.