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General Motors Q3 Earnings Preview: Should You Grab GM Stock Now?
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General Motors (GM - Free Report) is slated to release third-quarter 2024 results tomorrow, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $2.50 per share and $44.7 billion, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The EPS estimate for the to-be-reported quarter has been revised down by 2 cents over the past seven days. The bottom-line projection indicates year-over-year growth of 9.6%. The Zacks Consensus Estimate for quarterly revenues suggests a modest year-over-year increase of 1.26%.
Image Source: Zacks Investment Research
For the current year, the Zacks Consensus Estimate for GM’s revenues is pegged at $176.7 billion, implying a rise of 2.85% year over year. The consensus mark for 2024 EPS is pegged at $9.92, implying growth of around 29.2% on a year-over-year basis.
In the trailing four quarters, this U.S. legacy automaker surpassed EPS estimates on all occasions, with the average earnings surprise being 18.8%.
Our proven model does not conclusively predict 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. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
General Motors’ third-quarter sales in the United States declined 2.2% year over year to 659,601 vehicles. However, that was better than the 3% drop forecast by Cox Automotive and Edmunds. Better-than-expected sales could be attributed to higher sales of electric vehicles (EV) and compact crossovers. GM saw a 60% year-over-year increase in EV sales, delivering 32,095 EVs in the third quarter, up 46% from the previous quarter. The company sold 9,772 units of the Chevrolet Equinox EV, 7,998 units of Chevrolet Blazer EV and 7,224 units of Cadillac Lyriq. More than 4,300 GMC Hummer EV pickups and SUVs were delivered during the quarter.
Our estimate for wholesale vehicle sales volumes in the GMNA (General Motors North America) segment is 825,000 units, suggesting a year-over-year uptick of 1.8%. We project revenues from the GMNA segment to be $36.5 billion, implying an increase of 1.3%. Operating income from the unit is estimated at $3.82 billion, implying growth of 8.3%.
While sales in North America are likely to have provided a boost, weak deliveries in China are expected to limit overall revenues. All of GM's brands in China saw significant declines. Buick deliveries were about 67,000, down from 151,000 in the previous year. Chevrolet delivered almost 8,000 vehicles, down year over year from 50,000. Cadillac delivered about 21,000 vehicles, down year over year from 45,000. Meanwhile, SAIC-GM-Wuling deliveries exceeded 328,000 units, up from 295,000 units sold in the year-ago period. Overall, GM and its joint venture delivered around 426,000 vehicles in China in the third quarter, down 21.2% year over year. In the first two quarters of this year, GM posted a $210 million loss in China.On the last earnings call, Barra notified that the rest of the year will remain challenging as the headwinds are not likely to ease.
We also expect wholesale volumes from the GMI unit (excluding China JV) to be down roughly 12.5% in the quarter to be reported to 150,000 units. Our projections call for a contraction of 17.4% and 88% in revenues and operating income, respectively, year over year.
GM’s Price Performance & Valuation
On a year-to-date basis, shares of GM have surged 37%, outperforming the industry. It has also performed better than its major peers, including Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) .
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation perspective, General Motors is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.32, below its median of 0.33 over the last five years. It is also trading at a discount compared to the industry’s 1.57. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investor Considerations for GM Stock
General Motors remains a resilient player in the automotive industry, supported by more than $35 billion in automotive liquidity, ensuring stability even through economic cycles. While GM is progressing toward its EV transition, it continues to generate substantial cash flow from its core gas- and diesel-powered vehicle lineup, with plans to launch eight new or redesigned gasoline-powered SUVs in North America over the next year. This will help GM maintain profitability during the transition.
The company targets positive variable profits on its EVs by the end of 2024, but concerns remain. During its latest Investor Day, GM expressed a more cautious tone about achieving its long-term EV profitability goals, including mid-single-digit EV margins by 2025. Headwinds such as expected price declines of 1-1.5% in the latter half of 2024, rising commodity costs, and marketing expenses could pressure GM’s profitability. Additionally, its self-driving subsidiary, Cruise, faces significant losses, while challenges in the Chinese market further cloud GM’s outlook.
Last Word
GM’s strong liquidity, robust product portfolio and continued success in traditional vehicle sales provide a solid foundation for long-term growth as it works through hurdles in its EV and autonomous vehicle initiatives. Near-term risks like rising costs, pricing pressure and difficulties in the Chinese market could impact performance. Investors should rather hold off on any decisions until GM’s third-quarter results are released tomorrow, which are expected to offer more insights into its China operations and plans for a potential turnaround in the region.
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General Motors Q3 Earnings Preview: Should You Grab GM Stock Now?
General Motors (GM - Free Report) is slated to release third-quarter 2024 results tomorrow, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $2.50 per share and $44.7 billion, respectively.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
The EPS estimate for the to-be-reported quarter has been revised down by 2 cents over the past seven days. The bottom-line projection indicates year-over-year growth of 9.6%. The Zacks Consensus Estimate for quarterly revenues suggests a modest year-over-year increase of 1.26%.
For the current year, the Zacks Consensus Estimate for GM’s revenues is pegged at $176.7 billion, implying a rise of 2.85% year over year. The consensus mark for 2024 EPS is pegged at $9.92, implying growth of around 29.2% on a year-over-year basis.
In the trailing four quarters, this U.S. legacy automaker surpassed EPS estimates on all occasions, with the average earnings surprise being 18.8%.
General Motors Company Price and EPS Surprise
General Motors Company price-eps-surprise | General Motors Company Quote
Q3 Earnings Whispers for GM Stock
Our proven model does not conclusively predict 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. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
GM has an Earnings ESP of -4.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Shape General Motors’ Q3 Results
General Motors’ third-quarter sales in the United States declined 2.2% year over year to 659,601 vehicles. However, that was better than the 3% drop forecast by Cox Automotive and Edmunds. Better-than-expected sales could be attributed to higher sales of electric vehicles (EV) and compact crossovers. GM saw a 60% year-over-year increase in EV sales, delivering 32,095 EVs in the third quarter, up 46% from the previous quarter. The company sold 9,772 units of the Chevrolet Equinox EV, 7,998 units of Chevrolet Blazer EV and 7,224 units of Cadillac Lyriq. More than 4,300 GMC Hummer EV pickups and SUVs were delivered during the quarter.
Our estimate for wholesale vehicle sales volumes in the GMNA (General Motors North America) segment is 825,000 units, suggesting a year-over-year uptick of 1.8%. We project revenues from the GMNA segment to be $36.5 billion, implying an increase of 1.3%. Operating income from the unit is estimated at $3.82 billion, implying growth of 8.3%.
While sales in North America are likely to have provided a boost, weak deliveries in China are expected to limit overall revenues. All of GM's brands in China saw significant declines. Buick deliveries were about 67,000, down from 151,000 in the previous year. Chevrolet delivered almost 8,000 vehicles, down year over year from 50,000. Cadillac delivered about 21,000 vehicles, down year over year from 45,000. Meanwhile, SAIC-GM-Wuling deliveries exceeded 328,000 units, up from 295,000 units sold in the year-ago period. Overall, GM and its joint venture delivered around 426,000 vehicles in China in the third quarter, down 21.2% year over year. In the first two quarters of this year, GM posted a $210 million loss in China.On the last earnings call, Barra notified that the rest of the year will remain challenging as the headwinds are not likely to ease.
We also expect wholesale volumes from the GMI unit (excluding China JV) to be down roughly 12.5% in the quarter to be reported to 150,000 units. Our projections call for a contraction of 17.4% and 88% in revenues and operating income, respectively, year over year.
GM’s Price Performance & Valuation
On a year-to-date basis, shares of GM have surged 37%, outperforming the industry. It has also performed better than its major peers, including Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) .
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation perspective, General Motors is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.32, below its median of 0.33 over the last five years. It is also trading at a discount compared to the industry’s 1.57. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investor Considerations for GM Stock
General Motors remains a resilient player in the automotive industry, supported by more than $35 billion in automotive liquidity, ensuring stability even through economic cycles. While GM is progressing toward its EV transition, it continues to generate substantial cash flow from its core gas- and diesel-powered vehicle lineup, with plans to launch eight new or redesigned gasoline-powered SUVs in North America over the next year. This will help GM maintain profitability during the transition.
The company targets positive variable profits on its EVs by the end of 2024, but concerns remain. During its latest Investor Day, GM expressed a more cautious tone about achieving its long-term EV profitability goals, including mid-single-digit EV margins by 2025. Headwinds such as expected price declines of 1-1.5% in the latter half of 2024, rising commodity costs, and marketing expenses could pressure GM’s profitability. Additionally, its self-driving subsidiary, Cruise, faces significant losses, while challenges in the Chinese market further cloud GM’s outlook.
Last Word
GM’s strong liquidity, robust product portfolio and continued success in traditional vehicle sales provide a solid foundation for long-term growth as it works through hurdles in its EV and autonomous vehicle initiatives. Near-term risks like rising costs, pricing pressure and difficulties in the Chinese market could impact performance. Investors should rather hold off on any decisions until GM’s third-quarter results are released tomorrow, which are expected to offer more insights into its China operations and plans for a potential turnaround in the region.