Breaking News: General Motors Company (GM) Falls 3.1% After Earnings! Here’s What you Need to Know!.A month has passed since General Motors Company (GM) released its most recent earnings report. In that period, shares have lost around 3.1%, trailing the S&P 500.
Will the recent downward trend continue in the run-up to its next earnings report, or is General Motors Company due for a turnaround? Before we get into how investors and analysts have responded recently, let’s take a brief look at its most recent earnings report to gain a better understanding of the key drivers.
Earnings for the third quarter of General Motors exceeded expectations.
General Motors reported adjusted profits per share of $2.28 in the third quarter of 2023, exceeding the Zacks Consensus Estimate of $1.84 due to higher-than-expected profit from the GMNA, GMI, and Financial businesses. The bottom line also increased from $2.25 per share in the previous quarter. Revenues of $44,131 million surpassed the Zacks Consensus Estimate of $43,296 million and rose from $41,889 million in the previous year.
The automaker reported adjusted earnings before interest and taxes (“EBIT”) of $3,564 million, down from $4,287 million the previous year. The automaker’s share of the GM market was 9.1% in the reporting quarter, down from 9.2% in the previous quarter.
Performance by Segment
GM North America (“GMNA”) reported net revenues of $36,106 million in the third quarter of 2022.
Up from $34,691 million in the same time the previous year. However, revenues fell short of our model’s forecast of $36,557.9 million due to lower-than-expected deliveries. Wholesale car sales in the GMNA unit totaled 810,000 units, up from 784,000 units in the previous quarter but falling short of our projection of 840,000 units. The segment’s operational profit was $3,526 million, down from $3,894 million in the previous year. However, the metric exceeded our projection of $2,991.9 million due to advantages from the fixed cost reduction programme.
GM International’s (“GMI”) net revenues in the reported quarter were $4,330 million, up from $3,980 million in the previous quarter. Due to higher-than-expected deliveries. The metric also exceeded our expectation of $3,628 million. The segment’s wholesale car sales of 171,000 units were down from 182,000 units in the previous quarter, but they exceeded our expectation of 163,000 units. GMI reported an operational profit of $357 million, up from $334 million the previous year and exceeding our forecast of $312.2 million, driven by favourable pricing, delivery outperformance, and the advantages of the fixed cost reduction programme.
GM Financial reported net revenues of $3,641 million in the third quarter, up from $3,187 million in the previous year and ahead of our forecast of $3,076.4 million. The segment’s EBIT-adjusted operating profit fell to $741 million from $911 million. However, due to portfolio expansion and a greater effective yield, the metric exceeded our projection of $604.6 million.
GM Cruise reported net revenues of $25 million in the third quarter, the same as in the previous year. The metric matched our expectations. The segment recorded an operating loss of $732 million, which was higher than the prior-year quarter’s loss of $497 million. The reported loss significantly exceeded our expectation of $516.6 million due to higher-than-expected costs associated with operational scaling.
Financial Situation
General Motors had $25,224 million in cash and cash equivalents as of September 30, 2023, compared to $19,153 million as of December 31, 2022. Long-term automotive debt was $15,962 million at the end of the quarter, compared to $15,885 million as of December 31, 2022.
During the quarter under review, General Motors’ net automotive cash provided by operating activities amounted to $6,749 million. In the third quarter of 2023, the firm generated an adjusted automotive free cash flow of $4,910 million, up from $4,593 million the previous year.
How Have Estimates Changed Since Then?
Investors have noticed a negative trend in estimate revisions over the last month.
Because of these adjustments, the consensus estimate has changed -55.51%.
VGM Ratings
General Motors Company currently has a solid Growth Score of B, but it lags significantly on the Momentum Score front with an F. However, the stock received an A on the value front, putting it in the top 20% for this investment strategy.
In total, the stock has a VGM Score of A. If you aren’t committed to a single strategy, this is the score you should be looking at.
Outlook
Estimates for the stock have been broadly drifting downward, and the scale of these changes signals a bearish shift. Notably, General Motors Company is ranked #3 (Hold) by Zacks. We anticipate an in-line return from the stock in the next months.
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General Motors Company (GM) : Free Stock Analysis Report
