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GM Vs. F: Which Auto Giant is a Better Buy Before Q4 Earnings?
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As the fourth-quarter 2024 earnings season for the auto sector kicks off tomorrow, investors are turning their attention to General Motors (GM - Free Report) and Ford (F - Free Report) to assess which auto giant presents a better buying opportunity now. GM is set to report results tomorrow, before the opening bell. Ford will report on Feb. 5 after the closing bell.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Q4 Earnings Whispers for Ford and General Motors
The Zacks Consensus Estimate for GM’s to-be-reported quarter’s earnings and revenues is pegged at $1.75 per share and $43.8 billion, respectively. In the trailing four quarters, the company surpassed EPS estimates on all occasions, with the average earnings surprise being 17.54%.
The consensus mark for F’s EPS and sales are 34 cents and $43.6 billion, respectively. Ford’s earnings surprise history isn’t that solid. In the past four quarters, the company beat the estimates twice, missed once and matched on the other.
General Motors carries a Zacks Rank #2 and has an Earnings ESP of +2.85% while Ford has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Key Q4 Predictions for GM & F
Buoyed by strong results in the first three quarters of 2024, solid vehicle demand and cost cuts, General Motors lifted its full-year 2024 outlook on the last earnings call. We project the company’s fourth-quarter adjusted EBIT to be more than $2.3 billion, suggesting a 33% uptick from the year-ago period.
General Motors’ strength in the North American market is set to buoy results. We expect fourth-quarter revenues and operating income from the segment to rise 2% and 43%, respectively. However, things are not looking up for the GMI unit (excluding China JV). Our projections call for a contraction of 10.6% and 73% in revenues and operating income, respectively, year over year. Also, GM expects to incur as much as $5 billion in charges and write-downs in the fourth quarter of 2024 related to the restructuring of its China operations.
On the last earnings call, Ford cut full-year 2024 EBIT forecast amid steep warranty costs and higher inflation at its joint venture in Turkey. It expects the metric to be around $10 billion, at the lower end of the previously guided range of $10-$12 billion. We anticipate fourth-quarter revenues from Ford Blue and Model e units to decline 2% and 23% to $25.7 billion and $1.2 billion, respectively. Pricing pressure and increased investments in EVs are resulting in high losses in the Ford Model e segment.
Meanwhile, the Ford Pro segment is thriving on strong order books, increasing demand signals and the successful launch of the all-new Super Duty. We expect fourth-quarter revenues from the segment to increase 7% to $16.4 billion. Ford recently announced that it is expected to report a $700 million special item gain in the quarter to be reported due to pension adjustments.
After having discussed the fourth-quarter expectations for both stocks, let’s find out which of these legendary automakers is worth placing your bets on now.
The Case for General Motors
GM is the top-selling automaker in the United States, having sold 2.7 million vehicles in 2024. It also secured the second spot in U.S. BEV sales last year, just behind Tesla. The company’s diverse lineup, including the Chevy Equinox EV, Cadillac Lyriq and GMC Hummer EV, positioned it as the second-largest EV seller in the country. General Motors’ deals with Vianode, Lithium Americas, LG Chemical, POSCO Chemical and Livent have boosted its EV supply chain, aligning with its long-term electrification goals.
Encouragingly, GM aimed to make its EVs profitable on an EBIT basis by the end of 2024. By that time, General Motors is also expected to have reduced $2 billion in fixed costs. The firm’s balance sheet strength and robust buyback program are other positives. While operations in China remain a concern, especially amid fierce competition and pricing pressure from other Chinese brands, General Motors expects the restructuring of operations to pay off this year.
The Case for Ford
Ford was the third best-seller in the United States in 2024 just behind GM and Toyota, having sold a little more than 2 million vehicles. Ford’s strong lineup, including F-series trucks and SUVs, is set to grow with new Maverick, Bronco and Expedition Navigator launches. Continued strength across all three domains — vehicles, software and physical services — is boosting Ford’s Pro business. Its increasing focus on software technology and services business will be a major driver.
Ford’s attractive dividend yield of over 5% adds to its appeal. However, near-term concerns are huge. Losses from Ford’s EV business are expected to have widened last year, dragging the company’s overall results. Another major overhand for the company is its high warranty costs. The automaker’s quality issues, especially with older models, have led to elevated warranty costs. Despite efforts to address these issues, Ford has indicated that this would remain a headwind in 2025 as well.
Comparing F & GM Valuation
If we look at the Price/Earnings ratio, GM shares currently trade at 5X forward earnings, below its 3-year high of 7.83X. Ford also trades at a discount relative to its 3-year high at 5.91X forward earnings. But comparatively, GM looks more attractive at the moment.
Image Source: Zacks Investment Research
Conclusion
If you have to choose between these two auto heavyweights, General Motors seems a better pick now, given its U.S. auto market leadership, solid earnings history, strides in EV profitability and a steadfast commitment to reduce cuts. Ford, despite its rich dividend yield, doesn’t seem a safe bet now amid persistent EV losses and rising warranty costs. With regard to valuation as well, GM has the upper hand. Considering these factors, parking your cash in General Motors seems a better choice now.
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GM Vs. F: Which Auto Giant is a Better Buy Before Q4 Earnings?
As the fourth-quarter 2024 earnings season for the auto sector kicks off tomorrow, investors are turning their attention to General Motors (GM - Free Report) and Ford (F - Free Report) to assess which auto giant presents a better buying opportunity now. GM is set to report results tomorrow, before the opening bell. Ford will report on Feb. 5 after the closing bell.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Q4 Earnings Whispers for Ford and General Motors
The Zacks Consensus Estimate for GM’s to-be-reported quarter’s earnings and revenues is pegged at $1.75 per share and $43.8 billion, respectively. In the trailing four quarters, the company surpassed EPS estimates on all occasions, with the average earnings surprise being 17.54%.
General Motors Company Price and EPS Surprise
General Motors Company price-eps-surprise | General Motors Company Quote
The consensus mark for F’s EPS and sales are 34 cents and $43.6 billion, respectively. Ford’s earnings surprise history isn’t that solid. In the past four quarters, the company beat the estimates twice, missed once and matched on the other.
Ford Motor Company Price and EPS Surprise
Ford Motor Company price-eps-surprise | Ford Motor Company Quote
While our proprietary model predicts an earnings beat for General Motors this time around, that’s not the case for Ford.
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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.
General Motors carries a Zacks Rank #2 and has an Earnings ESP of +2.85% while Ford has a Zacks Rank #4 (Sell) and an Earnings ESP of 0.00%.
Key Q4 Predictions for GM & F
Buoyed by strong results in the first three quarters of 2024, solid vehicle demand and cost cuts, General Motors lifted its full-year 2024 outlook on the last earnings call. We project the company’s fourth-quarter adjusted EBIT to be more than $2.3 billion, suggesting a 33% uptick from the year-ago period.
General Motors’ strength in the North American market is set to buoy results. We expect fourth-quarter revenues and operating income from the segment to rise 2% and 43%, respectively. However, things are not looking up for the GMI unit (excluding China JV). Our projections call for a contraction of 10.6% and 73% in revenues and operating income, respectively, year over year. Also, GM expects to incur as much as $5 billion in charges and write-downs in the fourth quarter of 2024 related to the restructuring of its China operations.
On the last earnings call, Ford cut full-year 2024 EBIT forecast amid steep warranty costs and higher inflation at its joint venture in Turkey. It expects the metric to be around $10 billion, at the lower end of the previously guided range of $10-$12 billion. We anticipate fourth-quarter revenues from Ford Blue and Model e units to decline 2% and 23% to $25.7 billion and $1.2 billion, respectively. Pricing pressure and increased investments in EVs are resulting in high losses in the Ford Model e segment.
Meanwhile, the Ford Pro segment is thriving on strong order books, increasing demand signals and the successful launch of the all-new Super Duty. We expect fourth-quarter revenues from the segment to increase 7% to $16.4 billion. Ford recently announced that it is expected to report a $700 million special item gain in the quarter to be reported due to pension adjustments.
After having discussed the fourth-quarter expectations for both stocks, let’s find out which of these legendary automakers is worth placing your bets on now.
The Case for General Motors
GM is the top-selling automaker in the United States, having sold 2.7 million vehicles in 2024. It also secured the second spot in U.S. BEV sales last year, just behind Tesla. The company’s diverse lineup, including the Chevy Equinox EV, Cadillac Lyriq and GMC Hummer EV, positioned it as the second-largest EV seller in the country. General Motors’ deals with Vianode, Lithium Americas, LG Chemical, POSCO Chemical and Livent have boosted its EV supply chain, aligning with its long-term electrification goals.
Encouragingly, GM aimed to make its EVs profitable on an EBIT basis by the end of 2024. By that time, General Motors is also expected to have reduced $2 billion in fixed costs. The firm’s balance sheet strength and robust buyback program are other positives. While operations in China remain a concern, especially amid fierce competition and pricing pressure from other Chinese brands, General Motors expects the restructuring of operations to pay off this year.
The Case for Ford
Ford was the third best-seller in the United States in 2024 just behind GM and Toyota, having sold a little more than 2 million vehicles. Ford’s strong lineup, including F-series trucks and SUVs, is set to grow with new Maverick, Bronco and Expedition Navigator launches. Continued strength across all three domains — vehicles, software and physical services — is boosting Ford’s Pro business. Its increasing focus on software technology and services business will be a major driver.
Ford’s attractive dividend yield of over 5% adds to its appeal. However, near-term concerns are huge. Losses from Ford’s EV business are expected to have widened last year, dragging the company’s overall results. Another major overhand for the company is its high warranty costs. The automaker’s quality issues, especially with older models, have led to elevated warranty costs. Despite efforts to address these issues, Ford has indicated that this would remain a headwind in 2025 as well.
Comparing F & GM Valuation
If we look at the Price/Earnings ratio, GM shares currently trade at 5X forward earnings, below its 3-year high of 7.83X. Ford also trades at a discount relative to its 3-year high at 5.91X forward earnings. But comparatively, GM looks more attractive at the moment.
Image Source: Zacks Investment Research
Conclusion
If you have to choose between these two auto heavyweights, General Motors seems a better pick now, given its U.S. auto market leadership, solid earnings history, strides in EV profitability and a steadfast commitment to reduce cuts. Ford, despite its rich dividend yield, doesn’t seem a safe bet now amid persistent EV losses and rising warranty costs. With regard to valuation as well, GM has the upper hand. Considering these factors, parking your cash in General Motors seems a better choice now.