Why Is General Motors Company (GM) Up 4.7% Since Last Earnings Report?
It has been about a month since the last earnings report for General Motors Company (GM). Shares have added about 4.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is General Motors Company due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
General Motors Q4 Earnings Top Estimates
General Motors reported fourth-quarter 2023 adjusted earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of $1.12. The bottom line, however, decreased from the year-ago quarter’s level of $2.12. Revenues of $42.98 billion beat the Zacks Consensus Estimate of $40.78 billion but decreased from $43.1 billion recorded in the year-ago period.
The U.S. auto giant recorded adjusted earnings before interest and taxes (EBIT) of $1.75 billion, lower than $3.79 billion in the prior-year quarter. The automaker’s share in the GM market was 8.5% in the reported quarter compared with 9.1% in the year-ago quarter.
Segmental Performance
GM North America (“GMNA”) generated net revenues of $35.23 billion, down from $35.47 billion recorded in the corresponding period of 2022. However, the figure outpaced our model projection of $33.2 billion on higher-than-expected deliveries. Wholesale vehicle sales in the GMNA unit totaled 782,000 units, down from 787,000 units reported in the year-ago quarter. The figure, however, surpassed our estimate of 748,000 units. The segment’s operating profit totaled $2.01 billion, down from $3.65 billion recorded in the year-earlier period. The metric also lagged our estimate of $2.66 billion due to EV inventory allowance adjustments and the strike’s impact.
GM International's (“GMI”) net revenues in the reported quarter amounted to $3.94 billion, down from the year-ago quarter’s $4.32 billion. The metric also missed our estimate of $4.32 billion due to lower-than-expected deliveries. The segment’s wholesale vehicle sales of 161,000 units decreased from 180,000 units in the year-ago quarter and also missed our projection of 176,000 units. GMI reported an operating profit of $269 million, which declined from the year-ago quarter's profit of $272 million and also lagged our estimate of $309.7 million.
GM Financial generated net revenues of $3.74 billion in the quarter, up from $3.28 billion recorded in the year-ago period and ahead of our prediction of $3.2 billion. The segment recorded an EBIT-adjusted operating profit of $707 million, down from $775 million recorded in the year-ago period. The metric also missed our prediction of $726.8 million.
GM Cruise recorded net revenues of $25 million in the fourth quarter, flat year over year. The metric came in line with our projection as well. The segment posted an operating loss of $792 million, wider than a loss of $524 million reported in the prior-year quarter. The reported loss also came in wider than our estimate of a loss of $610.4 million due to lower volume and mix.
Financial Position
General Motors had cash and cash equivalents of $18.85 billion as of Dec 31, 2023, compared with $19.15 billion as of Dec 31, 2022. The long-term automotive debt at the end of the quarter was $15.98 billion compared with $15.88 billion as of Dec 31, 2022.
Net automotive cash provided by operating activities amounted to $4.66 billion during the quarter under review. The company recorded an adjusted automotive free cash flow of $1.34 billion in fourth-quarter 2023, down from $4.46 billion recorded in the year-ago period.
GM declared its first-quarter dividend of 12 cents per share, marking a 35% increase from the prior payout. The dividend will be paid on Mar 14, 2024, to shareholders as of Mar 1, 2024.
2024 Guidance
For full-year 2024, GM expects adjusted EBIT in the range of $12-$14 billion. Adjusted diluted EPS is anticipated in the range of $8.50-$9.50. Capex is predicted to be in the $10-$11 billion range. Adjusted automotive free cash flow is expected in the band of $8-$10 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
The consensus estimate has shifted 7.17% due to these changes.
VGM Scores
Currently, General Motors Company has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise General Motors Company has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
General Motors Company is part of the Zacks Automotive - Domestic industry. Over the past month, Paccar (PCAR), a stock from the same industry, has gained 10.9%. The company reported its results for the quarter ended December 2023 more than a month ago.
Paccar reported revenues of $8.59 billion in the last reported quarter, representing a year-over-year change of +11.1%. EPS of $2.70 for the same period compares with $1.76 a year ago.
Paccar is expected to post earnings of $2.13 per share for the current quarter, representing a year-over-year change of -5.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Paccar. Also, the stock has a VGM Score of A.
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