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General Motors (GM) Up 6.1% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for General Motors Company (GM - Free Report) . Shares have added about 6.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
General Motors Beats on Fourth-Quarter Earnings, Guidance Intact
General Motors posted adjusted earnings of $1.28 per share in the fourth quarter of 2016 that surpassed the Zacks Consensus Estimate of $1.14. Earnings in the reported quarter fell 7.9% from $1.39 per share recorded in the fourth quarter of 2015.
Net income (on a reported basis) amounted to $1.8 billion or $1.19 per share, down from $6.3 billion or $3.92 per share in the year-ago quarter.
Revenues in the reported quarter were a record $43.9 billion, 10.8% higher than $39.6 billion in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $42.20 billion.
Worldwide wholesale unit sales went up to 1.65 million vehicles from 1.52 million vehicles in the fourth quarter of 2015. Worldwide retail unit sales moved up to 2.85 million vehicles from 2.72 million vehicles in the year-ago quarter. The automaker’s global market share was 11.5% during the reported quarter, up from 11.4% in the year-ago quarter.
Adjusted earnings before interest and tax (EBIT) fell to $2.4 billion (5.4% of sales) from $2.8 billion (6.9%) in fourth-quarter 2015.
2016 Performance
Adjusted earnings for 2016 jumped 21.9% to a record $6.12 per share from $5.02 earned in 2015. Earnings also surpassed the Zacks Consensus Estimate of $6.01.
Revenues for 2016 increased 9.2% to a record $166.4 billion from $152.4 billion in 2015, and exceeded the Zacks Consensus Estimate of $165.12 billion.
Segment Results
GM North America (“GMNA”) reported a 13.1% rise in revenues to $31.3 billion during fourth quarter of 2016. Adjusted EBIT fell to $2.6 billion from $2.8 billion in the year-ago quarter.
GM Europe (“GME”) witnessed a 6.3% fall in revenues to $4.4 billion in the quarter. The segment reported an adjusted loss of $0.2 billion, narrower than a loss of $0.3 billion recorded in the year-ago quarter.
GM International Operations (“GMIO”) reported a 4.7% decline in revenues to $3.3 billion. Adjusted EBIT was $0.3 billion, down from $0.4 billion in the year-ago quarter. GM South America (“GMSA”) witnessed a 17.7% growth in revenues to $2.2 billion. The segment reported an adjusted loss of $0.1 billion, compared with break-even results in the year-ago quarter.
GM Financial reported an impressive 43.3% rise in revenues to $2.7 billion during the quarter. The segment’s EBIT was $0.2 billion, in line with the year-ago quarter.
Financial Position
General Motors had cash and cash equivalents of $12.96 billion as of Dec 31, 2016 compared with $15.24 billion as of Dec 31, 2015. Total debt (Automotive and Financial) increased to $84.63 billion as of Dec 31, 2016, from $63.11 billion as of Dec 31, 2015.
During 2016, net cash from operating activities was $16.55 billion compared with $11.69 billion in the comparable year-ago period. Capital expenditures amounted to $9.4 billion in 2016, compared with $7.8 billion in the same period a year ago.
2017 Outlook
General Motors expects 2017 adjusted earnings per share in the range of $6.00 to $6.50, compared with the 2016 figure of $6.12. The automaker also expects adjusted EBIT and adjusted EBIT margin to remain stable or improve, while revenues are projected to rise from 2016. Further, the automaker is expected to generate around $6 billion in adjusted automotive free cash flow. The automaker is optimistic about 2017 as the economy is strong and the company’s four brands are dramatically expanding their product offerings in fast-growing crossover segments.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three upward revisions for the current quarter compared to one downward. In the past month, the consensus estimate has shifted upward by 12.24% due to these changes.
At this time, General Motors' stock has an average Growth Score of 'C', 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock have a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.
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General Motors (GM) Up 6.1% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for General Motors Company (GM - Free Report) . Shares have added about 6.1% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
General Motors Beats on Fourth-Quarter Earnings, Guidance Intact
General Motors posted adjusted earnings of $1.28 per share in the fourth quarter of 2016 that surpassed the Zacks Consensus Estimate of $1.14. Earnings in the reported quarter fell 7.9% from $1.39 per share recorded in the fourth quarter of 2015.
Net income (on a reported basis) amounted to $1.8 billion or $1.19 per share, down from $6.3 billion or $3.92 per share in the year-ago quarter.
Revenues in the reported quarter were a record $43.9 billion, 10.8% higher than $39.6 billion in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $42.20 billion.
Worldwide wholesale unit sales went up to 1.65 million vehicles from 1.52 million vehicles in the fourth quarter of 2015. Worldwide retail unit sales moved up to 2.85 million vehicles from 2.72 million vehicles in the year-ago quarter. The automaker’s global market share was 11.5% during the reported quarter, up from 11.4% in the year-ago quarter.
Adjusted earnings before interest and tax (EBIT) fell to $2.4 billion (5.4% of sales) from $2.8 billion (6.9%) in fourth-quarter 2015.
2016 Performance
Adjusted earnings for 2016 jumped 21.9% to a record $6.12 per share from $5.02 earned in 2015. Earnings also surpassed the Zacks Consensus Estimate of $6.01.
Revenues for 2016 increased 9.2% to a record $166.4 billion from $152.4 billion in 2015, and exceeded the Zacks Consensus Estimate of $165.12 billion.
Segment Results
GM North America (“GMNA”) reported a 13.1% rise in revenues to $31.3 billion during fourth quarter of 2016. Adjusted EBIT fell to $2.6 billion from $2.8 billion in the year-ago quarter.
GM Europe (“GME”) witnessed a 6.3% fall in revenues to $4.4 billion in the quarter. The segment reported an adjusted loss of $0.2 billion, narrower than a loss of $0.3 billion recorded in the year-ago quarter.
GM International Operations (“GMIO”) reported a 4.7% decline in revenues to $3.3 billion. Adjusted EBIT was $0.3 billion, down from $0.4 billion in the year-ago quarter.
GM South America (“GMSA”) witnessed a 17.7% growth in revenues to $2.2 billion. The segment reported an adjusted loss of $0.1 billion, compared with break-even results in the year-ago quarter.
GM Financial reported an impressive 43.3% rise in revenues to $2.7 billion during the quarter. The segment’s EBIT was $0.2 billion, in line with the year-ago quarter.
Financial Position
General Motors had cash and cash equivalents of $12.96 billion as of Dec 31, 2016 compared with $15.24 billion as of Dec 31, 2015. Total debt (Automotive and Financial) increased to $84.63 billion as of Dec 31, 2016, from $63.11 billion as of Dec 31, 2015.
During 2016, net cash from operating activities was $16.55 billion compared with $11.69 billion in the comparable year-ago period. Capital expenditures amounted to $9.4 billion in 2016, compared with $7.8 billion in the same period a year ago.
2017 Outlook
General Motors expects 2017 adjusted earnings per share in the range of $6.00 to $6.50, compared with the 2016 figure of $6.12. The automaker also expects adjusted EBIT and adjusted EBIT margin to remain stable or improve, while revenues are projected to rise from 2016. Further, the automaker is expected to generate around $6 billion in adjusted automotive free cash flow. The automaker is optimistic about 2017 as the economy is strong and the company’s four brands are dramatically expanding their product offerings in fast-growing crossover segments.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been three upward revisions for the current quarter compared to one downward. In the past month, the consensus estimate has shifted upward by 12.24% due to these changes.
General Motors Company Price and Consensus
General Motors Company Price and Consensus | General Motors Company Quote
VGM Scores
At this time, General Motors' stock has an average Growth Score of 'C', 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock have a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.