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General Motors (GM) Updates Guidance, Boosts Dividend & Buyback
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General Motors (GM - Free Report) reinstated its earnings guidance for the full year of 2023. The automaker also announced a $10 billion accelerated share repurchase (“ASR”) program and unveiled its plan to increase its common stock dividend by 33%, starting January 2024.
GM had raised its guidance for full-year 2023 twice before withdrawing it in the third quarter due to the United Automobile Workers’ (UAW) strike. The automaker estimates $1.1 billion of adjusted EBIT impact pertaining to the lost production from UAW’s strike.
Here is a rundown of the reinstated outlook
The company reduced its guidance for net income attributable to stockholders to $9.1-$9.7 billion from the previous outlook of $9.3-$10.7 billion. It now expects adjusted EBIT of $11.7-$12.7 billion, down from the prior guidance of $12-$14 billion. It also reduced its adjusted diluted EPS range to $7.20-$7.70 from the previous range of $7.15-$8.15. It expects net automotive cash provided by operating activities in the range of $19.5-$21 billion compared with the prior range of $17.4-$20.4 billion. Adjusted automotive free cash flow is now expected between $10.5 billion and $11.5 billion compared with the previous guidance of $7-$9 billion.
Due to the new labor deal in the United States and Canada, the company expects costs to increase by $9.3 billion. To offset the costs to some extent, General Motors has narrowed its full-year 2023 capital spending guidance. It expects capital expenditure to range between $11 billion and $11.5 billion compared with the previous guidance of $11-$12 billion due to the retiming of certain product programs and effective capital investment.
GM is also addressing challenges associated with Cruise, its autonomous vehicle subsidiary, which incurred a loss of $1.9 billion in the first nine months of 2023. The company aims to minimize its spending on Cruise by hundreds of millions of dollars in 2024 compared with 2023.
Per the company’s ASR program, it will advance an aggregate of $10 billion to the executing banks, which include Bank of America, Goldman Sachs & Co., Barclays Bank PLC and Citibank. It will immediately receive and retire $6.8 billion worth of its common stock. General Motors said that the number of shares repurchased under the program will be determined upon final settlement and on average of the daily volume-weighted average prices of common stock during the program’s term.
Besides ASR, the company has $1.4 billion remaining under its share repurchase authorization for opportunistic share repurchases. It canceled a $6 billion revolving credit facility and plans to enter a new 364-day $3 billion credit facility.
GM has returned $4.2 billion in dividends and buybacks from January 2022 through the third quarter of 2023. It plans to increase its dividend to 12 cents, representing a rise of 33% from the previous quarter, beginning in 2024.
The Zacks Consensus Estimate for VLVLY’s 2023 sales and earnings indicates year-over-year growth of 4.2% and 65.6%, respectively. The EPS estimate for 2023 has increased by 2 cents in the past 30 days. The EPS estimate for 2024 has increased by 11 cents in the past 60 days.
The Zacks Consensus Estimate for RNLSY’s 2023 sales and earnings indicates year-over-year growth of 4.5% and 128.1%, respectively. The EPS estimates for 2023 and 2024 have increased by 15 cents and 2 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2023 sales indicates year-over-year growth of 160.2%. The EPS estimate for 2023 has increased by 62 cents in the past 60 days. The EPS estimate for 2024 has increased by a penny in the past 30 days.
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General Motors (GM) Updates Guidance, Boosts Dividend & Buyback
General Motors (GM - Free Report) reinstated its earnings guidance for the full year of 2023. The automaker also announced a $10 billion accelerated share repurchase (“ASR”) program and unveiled its plan to increase its common stock dividend by 33%, starting January 2024.
GM had raised its guidance for full-year 2023 twice before withdrawing it in the third quarter due to the United Automobile Workers’ (UAW) strike. The automaker estimates $1.1 billion of adjusted EBIT impact pertaining to the lost production from UAW’s strike.
Here is a rundown of the reinstated outlook
The company reduced its guidance for net income attributable to stockholders to $9.1-$9.7 billion from the previous outlook of $9.3-$10.7 billion. It now expects adjusted EBIT of $11.7-$12.7 billion, down from the prior guidance of $12-$14 billion. It also reduced its adjusted diluted EPS range to $7.20-$7.70 from the previous range of $7.15-$8.15. It expects net automotive cash provided by operating activities in the range of $19.5-$21 billion compared with the prior range of $17.4-$20.4 billion. Adjusted automotive free cash flow is now expected between $10.5 billion and $11.5 billion compared with the previous guidance of $7-$9 billion.
Due to the new labor deal in the United States and Canada, the company expects costs to increase by $9.3 billion. To offset the costs to some extent, General Motors has narrowed its full-year 2023 capital spending guidance. It expects capital expenditure to range between $11 billion and $11.5 billion compared with the previous guidance of $11-$12 billion due to the retiming of certain product programs and effective capital investment.
GM is also addressing challenges associated with Cruise, its autonomous vehicle subsidiary, which incurred a loss of $1.9 billion in the first nine months of 2023. The company aims to minimize its spending on Cruise by hundreds of millions of dollars in 2024 compared with 2023.
Per the company’s ASR program, it will advance an aggregate of $10 billion to the executing banks, which include Bank of America, Goldman Sachs & Co., Barclays Bank PLC and Citibank. It will immediately receive and retire $6.8 billion worth of its common stock. General Motors said that the number of shares repurchased under the program will be determined upon final settlement and on average of the daily volume-weighted average prices of common stock during the program’s term.
Besides ASR, the company has $1.4 billion remaining under its share repurchase authorization for opportunistic share repurchases. It canceled a $6 billion revolving credit facility and plans to enter a new 364-day $3 billion credit facility.
GM has returned $4.2 billion in dividends and buybacks from January 2022 through the third quarter of 2023. It plans to increase its dividend to 12 cents, representing a rise of 33% from the previous quarter, beginning in 2024.
Zacks Rank & Key Picks
GM currently carries Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Volvo (VLVLY - Free Report) , Renault SA (RNLSY - Free Report) and BYD Company Limited (BYDDY - Free Report) , each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VLVLY’s 2023 sales and earnings indicates year-over-year growth of 4.2% and 65.6%, respectively. The EPS estimate for 2023 has increased by 2 cents in the past 30 days. The EPS estimate for 2024 has increased by 11 cents in the past 60 days.
The Zacks Consensus Estimate for RNLSY’s 2023 sales and earnings indicates year-over-year growth of 4.5% and 128.1%, respectively. The EPS estimates for 2023 and 2024 have increased by 15 cents and 2 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for BYDDY’s 2023 sales indicates year-over-year growth of 160.2%. The EPS estimate for 2023 has increased by 62 cents in the past 60 days. The EPS estimate for 2024 has increased by a penny in the past 30 days.