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GM (GM) Down 10.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for General Motors (GM - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is GM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

General Motors Q1 Earnings Beat, Revenues Miss Estimates

General Motors reported adjusted earnings of $1.41 per share in first-quarter 2019, down 1.4% from the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $1.09.

During the quarter, the sale of 2019 Chevrolet Silverado and GMC Sierra light-duty crew cabs grew 20% year over year. This was in sync with the automaker’s strategy to launch high-content, high-margin trucks.

General Motors reported revenues of $34.9 billion, down 3.4% from the year-ago quarter. Further, revenues missed the Zacks Consensus Estimate of $35.8 billion.

During the reported quarter, total wholesale unit sale decreased to 1.10 million from 1.16 million in the first quarter of 2018. Worldwide retail units sold decreased to 1.88 million from 2.10 million in the year-ago quarter.

This automaker’s global market share was 10.6% during the reported quarter, reflecting a decline from 11.4% in the year-ago quarter.

Segment Results

GM North America (“GMNA”) generated net sales and revenues of $27.4 billion in the first quarter of 2019, down from $27.8 billion recorded in first-quarter 2018.

GM International’s (“GMI”) net sales and revenues were $3.9 billion, declining from $4.8 billion in the year-ago quarter.

GM Financial generated net sales and revenues of $3.6 billion in the quarter under review, reflecting an increase from $3.4 billion recorded in the year-ago quarter.

Financial Position

General Motors had cash and cash equivalents of $17.2 billion as of Mar 31, 2019, compared with $20.8 billion as of Dec 31, 2018.

Adjusted automotive free cash flow during the reported quarter was $3.9 billion versus $3.3 billion used in the prior-year quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -14.01% due to these changes.

VGM Scores

Currently, GM has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, GM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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