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Why Is General Motors Company (GM) Down 10.1% Since Last Earnings Report?
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A month has gone by since the last earnings report for General Motors Company (GM - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is General Motors Company due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
General Motors Q2 Earnings & Sales Beat Mark
General Motors reported adjusted earnings of $1.97 per share for second-quarter 2021, topping the Zacks Consensus Estimate of $1.89. Higher-than-anticipated profits from its North America and Financial units drove this outperformance. The bottom line also turned around the year-ago quarter’s loss of 50 cents per share amid the company’s cost-containment efforts, and robust demand for SUVs as well as pickups.
Revenues of $34,167 million also surpassed the Zacks Consensus Estimate of $29,000 million. The top-line figure also jumped from the year-ago figure of $16,778 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,117 million, reversing the adjusted loss of $536 million seen in the prior-year quarter. This upside can be attributed to the prioritized production of its highest demand vehicles, gained market share in the full-size pick-up segment in the United States and strong used-car prices.
The automaker’s market share in the GM market was 10% for the reported quarter, decreasing from the year-ago period’s 10.9%.
Segmental Performance
GM North America (GMNA) generated second-quarter net revenues of $27,932 million, significantly up from the $11,604 million recorded in the corresponding period of 2020. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $22,053 million. The region’s wholesale vehicle sales of 642,000 units climbed from the 331,000 units reported in the year-ago quarter. The segment’s operating profit came in at $2,894 million, reversing the loss of $101 million witnessed the year-earlier period. The segmental profit also beat the consensus mark of $2,229 million. This outperformance was driven by solid customer demand for pick-ups and SUVs but slightly constrained by tight inventories amid the global semiconductor crunch.
GM International’s (GMI) net revenues for the reported quarter were $2,792 million, up from the year-ago quarter’s $1,677 million. The reported metric, however, lagged the consensus mark of $2,937 million. The unit turned an operating profit of $15 million against the year-ago loss of $270 million. This upswing primarily resulted from strong mix and pricing actions, partially offset by semiconductor headwinds, commodity costs and warranty expenses. The reported profit, however, missed the consensus mark of $120 million.
GM Financial generated net revenues of $3,426 million for the June-end quarter, slightly up from the $3,423 million recorded in the year-ago period but missing the consensus mark of $3,471 million. Nonetheless, the segment recorded an operating profit of $1,581 million, jumping from the $226 million witnessed in the prior-year quarter and beating the consensus mark of $1,239 million. This upside resulted from the positive impact of high used-vehicle prices, strong credit performance and reduced interest expense.
GM Cruise witnessed net revenues of $25 million for the second quarter, down from the $28 million reported in the year-earlier period but at par with the consensus mark. The segment posted an operating loss of $332 million compared with the $195 million loss reported in the prior-year quarter. The reported loss is also wider than the consensus mark of a loss of $238 million.
Financial Position
General Motors had cash and cash equivalents of $22.9 billion as of Jun 30, 2021 compared with $19.9 billion at the end of 2020. Long-term automotive debt at the end of the quarter was $16.4 billion compared with $16.2 billion as of Dec 31, 2020.
General Motors’ automotive cash provided by operating activities amounted to $4,007 million at the end of the April-June quarter. The company recorded adjusted automotive free cash flow (FCF) of $2,478 million for second-quarter 2021, comparing favorably with the negative FCF of $9,042 million in the prior-year period.
2021 Guidance Up
The expects 2021 adjusted EBIT and EPS per share in the band of $11.5-$13.5 billion and $5.4-$6.4, respectively, up from the previous forecast of $10-$11 billion and $4.5-$5.25.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -31.33% due to these changes.
VGM Scores
At this time, 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 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, General Motors Company has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is General Motors Company (GM) Down 10.1% Since Last Earnings Report?
A month has gone by since the last earnings report for General Motors Company (GM - Free Report) . Shares have lost about 10.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is General Motors Company due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
General Motors Q2 Earnings & Sales Beat Mark
General Motors reported adjusted earnings of $1.97 per share for second-quarter 2021, topping the Zacks Consensus Estimate of $1.89. Higher-than-anticipated profits from its North America and Financial units drove this outperformance. The bottom line also turned around the year-ago quarter’s loss of 50 cents per share amid the company’s cost-containment efforts, and robust demand for SUVs as well as pickups.
Revenues of $34,167 million also surpassed the Zacks Consensus Estimate of $29,000 million. The top-line figure also jumped from the year-ago figure of $16,778 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,117 million, reversing the adjusted loss of $536 million seen in the prior-year quarter. This upside can be attributed to the prioritized production of its highest demand vehicles, gained market share in the full-size pick-up segment in the United States and strong used-car prices.
The automaker’s market share in the GM market was 10% for the reported quarter, decreasing from the year-ago period’s 10.9%.
Segmental Performance
GM North America (GMNA) generated second-quarter net revenues of $27,932 million, significantly up from the $11,604 million recorded in the corresponding period of 2020. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $22,053 million. The region’s wholesale vehicle sales of 642,000 units climbed from the 331,000 units reported in the year-ago quarter. The segment’s operating profit came in at $2,894 million, reversing the loss of $101 million witnessed the year-earlier period. The segmental profit also beat the consensus mark of $2,229 million. This outperformance was driven by solid customer demand for pick-ups and SUVs but slightly constrained by tight inventories amid the global semiconductor crunch.
GM International’s (GMI) net revenues for the reported quarter were $2,792 million, up from the year-ago quarter’s $1,677 million. The reported metric, however, lagged the consensus mark of $2,937 million. The unit turned an operating profit of $15 million against the year-ago loss of $270 million. This upswing primarily resulted from strong mix and pricing actions, partially offset by semiconductor headwinds, commodity costs and warranty expenses. The reported profit, however, missed the consensus mark of $120 million.
GM Financial generated net revenues of $3,426 million for the June-end quarter, slightly up from the $3,423 million recorded in the year-ago period but missing the consensus mark of $3,471 million. Nonetheless, the segment recorded an operating profit of $1,581 million, jumping from the $226 million witnessed in the prior-year quarter and beating the consensus mark of $1,239 million. This upside resulted from the positive impact of high used-vehicle prices, strong credit performance and reduced interest expense.
GM Cruise witnessed net revenues of $25 million for the second quarter, down from the $28 million reported in the year-earlier period but at par with the consensus mark. The segment posted an operating loss of $332 million compared with the $195 million loss reported in the prior-year quarter. The reported loss is also wider than the consensus mark of a loss of $238 million.
Financial Position
General Motors had cash and cash equivalents of $22.9 billion as of Jun 30, 2021 compared with $19.9 billion at the end of 2020. Long-term automotive debt at the end of the quarter was $16.4 billion compared with $16.2 billion as of Dec 31, 2020.
General Motors’ automotive cash provided by operating activities amounted to $4,007 million at the end of the April-June quarter. The company recorded adjusted automotive free cash flow (FCF) of $2,478 million for second-quarter 2021, comparing favorably with the negative FCF of $9,042 million in the prior-year period.
2021 Guidance Up
The expects 2021 adjusted EBIT and EPS per share in the band of $11.5-$13.5 billion and $5.4-$6.4, respectively, up from the previous forecast of $10-$11 billion and $4.5-$5.25.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -31.33% due to these changes.
VGM Scores
At this time, 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 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, General Motors Company has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.