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Factors Shaping the Fate of General Motors' (GM) Q1 Earnings

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General Motors (GM - Free Report) is slated to release first-quarter 2021 results on May 5, before market open. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.02 per share on revenues of $33.26 billion.

The auto giant posted a higher-than-anticipated profit in the last reported quarter on stellar revenues in the North American and International segments.
 
Over the trailing four quarters, General Motors missed the Zacks Consensus Estimate on one occasion and beat in the remaining three — the average surprise being 5.95%. This is depicted in the graph below:

General Motors Company Price and EPS Surprise

General Motors Company Price and EPS Surprise

General Motors Company price-eps-surprise | General Motors Company Quote

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for General Motors’ first-quarter earnings per share has been revised upward by five cents to $1.02 over the past seven days. This also compares favorably with the year-ago quarter’s earnings per share of 62 cents. Moreover, the Zacks Consensus Estimate for revenues suggests a year-over-year increase of 1.68%.

Earnings Whispers

Our proven model predicts an earnings beat for General Motors this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: General Motors has an Earnings ESP of +3.77%. This is because the Most Accurate Estimate of $1.05 per share comes in three cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: General Motors carries a Zacks Rank of 3 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

With the auto sector steadily recovering from the pandemic-induced disruptions, General Motors’ first-quarter top and bottom lines are likely to have benefited amid this upbeat scenario.

Notably, General Motors’ retail sales in the United States, its most significant market, during the quarter under review jumped to 642,250 vehicles, marking a year-on-year rise of 19%, thanks to the gaining sales momentum of Cadillac, Buick, GMC and Chevrolet models.

Further, General Motors seems to have benefited from the rising vehicle sales in the world’s largest car market i.e. China, wherein it commands a huge presence. Encouragingly, the automaker’s retail sales in China during the March-end quarter were more than 780,000 vehicles, marking a year-on-year jump of a whopping 69%, owing to outperformance in luxury and premium vehicles, SUVs and MPVs, including the Cadillac CT5 and XT6, Buick GL8 family and Buick LaCrosse.

Additionally, for the quarter under discussion, the Zacks Consensus Estimate for net sales in the International market is pegged at $3,338 million, suggesting a jump from the $3,280 million recorded in the prior-year quarter. In fact, the consensus mark for wholesale volumes in the International markets is 194,000 units, calling for a year-on-year rise from the 191,000 units reported in prior-year quarter.  

For the to-be-reported quarter, the Zacks Consensus Estimate for net sales in the Financial segment is pinned at $3,597 million, suggesting an increase from the $3,561 recorded in the year-earlier quarter.

However, the consensus estimate for net sales in the North American market (which contributes a bulk of the company’s total revenues) is pinned at $23,811 million, indicating a decline from the $25,831 million recorded in the first quarter of 2020.  Also, the consensus mark for wholesale volumes in the said segment is 677,000 units, calling for a year-on-year decline of 12.6%.

Thus, rising sales in the International and financial segments are likely to have boosted the first-quarter margins for General Motors, partly offset by the dismal revenues in the North America segment.

Other Stocks to Consider

Here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

Credicorp Ltd (BAP - Free Report) has an Earnings ESP of +2.68% and carries a Zacks Rank #3 at present. The company will announce quarterly results on May 6.

American Axle & Manufacturing Holdings (AXL - Free Report) has an Earnings ESP of +0.53% and currently carries a Zacks Rank of 3. The company is slated to release earnings figures on May 7.

American Well Corporation (AMWL - Free Report) has an Earnings ESP of +9.44% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on May 12.

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