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General Motors (GM) Gains But Lags Market: What You Should Know

Zacks Equity Research
Skechers (SKX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

General Motors (GM) closed the most recent trading day at $39.84, moving +0.85% from the previous trading session. The stock lagged the S&P 500's daily gain of 0.88%. Elsewhere, the Dow gained 0.55%, while the tech-heavy Nasdaq added 1.32%.

Prior to today's trading, shares of the automaker had gained 7.48% over the past month. This has outpaced the Auto-Tires-Trucks sector's gain of 6.97% and the S&P 500's gain of 3.96% in that time.

Wall Street will be looking for positivity from GM as it approaches its next earnings report date. This is expected to be April 30, 2019. On that day, GM is projected to report earnings of $1.08 per share, which would represent a year-over-year decline of 24.48%. Meanwhile, our latest consensus estimate is calling for revenue of $35.95 billion, down 0.41% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $6.48 per share and revenue of $148.02 billion. These totals would mark changes of -0.92% and +0.66%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for GM. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. GM is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that GM has a Forward P/E ratio of 6.09 right now. This valuation marks a discount compared to its industry's average Forward P/E of 11.24.

Also, we should mention that GM has a PEG ratio of 0.68. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Automotive - Domestic was holding an average PEG ratio of 1.49 at yesterday's closing price.

The Automotive - Domestic industry is part of the Auto-Tires-Trucks sector. This group has a Zacks Industry Rank of 70, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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