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General Motors (GM) Foresees Stronger 2019 Backed by Launches

Zacks Equity Research

Shares of General Motors Company GM gained roughly 7.1% in a day’s trading on Jan 11. The rise in share price can be attributed to the company’s prediction of an earnings growth in 2019 along with an expectation of surpassing earnings estimates in 2018. The company will release its fourth-quarter and 2018 earnings on Feb 6.

For 2019, General Motors expects earnings per share to witness an uptrend compared with the prior expectation of 2018. The figure is projected to be between $6.50 and $7.00 in 2019 compared with its prior expectation of $5.80-$6.20 in 2018. Further, this Detroit-based automaker expects adjusted cash free cash flow of $4.5-$6 billion for the current year. New vehicle lineups of trucks, crossovers and SUVs are likely to boost General Motors’ earnings in 2019.

Despite predictions of a gloomy car market in 2019, this automaker predicts the U.S. market to remain strong, with an annual industry sale in the lower range of 17 million vehicles. In the US automotive market, the company expects to continue with its retail market growth through new Chevrolet Silverado and GMC Sierra light-duty full-size pickup trucks. Apart from trucks, the company’s Cadillac XT4, Chevrolet Blazer and all-new Cadillac XT6 luxury SUV are also expected to witness strong demand.

General Motors Company Price and Consensus

 

General Motors Company Price and Consensus | General Motors Company Quote

For China, General Motors expects industry retail sales to remain flat in 2019 compared with 2018’s figure of roughly 27 million. The automaker expects to combat challenging industry conditions with its more than 20 vehicles in 2019. The new or updated models majorly consist of crossovers and compact cars.

Further, the company reported about additional job cuts through 2020. In the last November, General Motors announced its decision to halt auto production at five of its assembly plants in North America and reduce the workforce.

Price Performance

Over the past three months, shares of General Motors have gained 16.9% compared with the industry’s increase of 14.5%.



Zacks Rank & Stocks to Consider

General Motors currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader auto sector are Bridgestone Corporation BRDCY, Genuine Parts Company GPC and Fox Factory Holding Corporation FOXF, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bridgestone has an expected long-term growth rate of 4.7%. Share price of the company has increased 4.5% in the past three months.

Genuine Parts has an expected long-term growth rate of 5%. Over the past three months, shares of the company have gained 0.6%.

Fox Factory has an expected long-term growth rate of 17.9%. Shares of the company have gained 5.5% in the past three months.

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