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General Motors (GM) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

General Motors (GM) closed the most recent trading day at $39.86, moving +0.96% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.28%. Elsewhere, the Dow gained 0.07%, while the tech-heavy Nasdaq added 0.71%.

Heading into today, shares of the automaker had gained 6.82% over the past month, outpacing the Auto-Tires-Trucks sector's gain of 2.77% and the S&P 500's gain of 1.93% in that time.

GM will be looking to display strength as it nears its next earnings release, which is expected to be August 1, 2019. In that report, analysts expect GM to post earnings of $1.43 per share. This would mark a year-over-year decline of 20.99%. Our most recent consensus estimate is calling for quarterly revenue of $35.71 billion, down 2.86% from the year-ago period.

GM's full-year Zacks Consensus Estimates are calling for earnings of $6.58 per share and revenue of $145.86 billion. These results would represent year-over-year changes of +0.61% and -0.81%, respectively.

Any recent changes to analyst estimates for GM should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.36% lower within the past month. GM is currently a Zacks Rank #3 (Hold).

Investors should also note GM's current valuation metrics, including its Forward P/E ratio of 6. This valuation marks a discount compared to its industry's average Forward P/E of 11.44.

Also, we should mention that GM has a PEG ratio of 0.67. 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. Automotive - Domestic stocks are, on average, holding a PEG ratio of 1.33 based on yesterday's closing prices.

The Automotive - Domestic industry is part of the Auto-Tires-Trucks sector. This industry currently has a Zacks Industry Rank of 164, which puts it in the bottom 36% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow GM in the coming trading sessions, be sure to utilize Zacks.com.


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