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Here's Why General Motors (GM) Stock Fell After Earnings
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Shortly after the company posted its fourth-quarter earnings results, shares of General Motors (GM - Free Report) fell more than 4.5% in Tuesday morning trading. In many aspects, GM’s report was encouraging, but it seems like investors are punishing the automaker for its currency woes and disappointing operating margins in key regions.
Positive Results
For the fourth quarter, General Motors reported adjusted earnings of $1.28 per share, which surpassed the Zacks Consensus Estimate of $1.14. GM faced tough year-over-year comparisons in the earnings department as the fourth quarter of 2015 included a big one-time tax item.
Nevertheless, General Motors saw fourth-quarter revenues grow 10.8% to $43.9 billion. This figure also came in ahead of our consensus estimate of $42.20 billion.
The carmaker saw worldwide wholesale unit sales of 1.65 million vehicles in the quarter, which was up from 1.52 million in the prior-year quarter. Retail unit sales were also up, with this year’s 2.85 million vehicles sold blowing past last year’s figure of 2.72 million vehicles.
Investor Concerns
Despite a solid double-beat, investors were concerned about some other key details in the report. For example, although unit sales grew, the total inventory of unsold vehicles in the United States rose by about one-third.
Furthermore, GM reported tougher margins in the quarter. North American profit margins declined to 8.4% from about 10% last year. The company also reported operating losses for the year in Europe and South America. GM said a weak British pound and struggling Mexican peso impacted results in these regions; the company also said that it does not expect to be profitable in Europe in 2017.
Of course, General Motors has also been under pressure from President Donald Trump, who has targeted the company for its foreign manufacturing processes. GM said that it is assessing how President Trump’s proposed tariffs on imports may affect the company.
Bottom Line
Sometimes solid earnings reports get overshadowed by tough days throughout the market, but stocks moved higher in Tuesday trading and investors look ready to buy. General Motors had plenty of strong data to report today, but investors may be declaring their hesitation towards the automotive industry right now.
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Here's Why General Motors (GM) Stock Fell After Earnings
Shortly after the company posted its fourth-quarter earnings results, shares of General Motors (GM - Free Report) fell more than 4.5% in Tuesday morning trading. In many aspects, GM’s report was encouraging, but it seems like investors are punishing the automaker for its currency woes and disappointing operating margins in key regions.
Positive Results
For the fourth quarter, General Motors reported adjusted earnings of $1.28 per share, which surpassed the Zacks Consensus Estimate of $1.14. GM faced tough year-over-year comparisons in the earnings department as the fourth quarter of 2015 included a big one-time tax item.
(Also Read: General Motors Beats on Q4 Earnings, Guidance Intact)
Nevertheless, General Motors saw fourth-quarter revenues grow 10.8% to $43.9 billion. This figure also came in ahead of our consensus estimate of $42.20 billion.
The carmaker saw worldwide wholesale unit sales of 1.65 million vehicles in the quarter, which was up from 1.52 million in the prior-year quarter. Retail unit sales were also up, with this year’s 2.85 million vehicles sold blowing past last year’s figure of 2.72 million vehicles.
Investor Concerns
Despite a solid double-beat, investors were concerned about some other key details in the report. For example, although unit sales grew, the total inventory of unsold vehicles in the United States rose by about one-third.
Furthermore, GM reported tougher margins in the quarter. North American profit margins declined to 8.4% from about 10% last year. The company also reported operating losses for the year in Europe and South America. GM said a weak British pound and struggling Mexican peso impacted results in these regions; the company also said that it does not expect to be profitable in Europe in 2017.
Of course, General Motors has also been under pressure from President Donald Trump, who has targeted the company for its foreign manufacturing processes. GM said that it is assessing how President Trump’s proposed tariffs on imports may affect the company.
Bottom Line
Sometimes solid earnings reports get overshadowed by tough days throughout the market, but stocks moved higher in Tuesday trading and investors look ready to buy. General Motors had plenty of strong data to report today, but investors may be declaring their hesitation towards the automotive industry right now.
Stocks that Aren't in the News. Yet.
You are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. Many of these companies are almost unheard of by the general public and just starting to get noticed by Wall Street. They have been pinpointed by the Zacks system that nearly tripled the market from 1988 through 2015 with a stellar average gain of +26% per year. See these high-potential stocks free >>