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General Motors (GM) Pre-Q2 Earnings Analysis: Should You Buy?
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General Motors (GM - Free Report) is slated to release second-quarter 2024 results on Jul 23, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $2.59 per share and $45 billion, respectively.
The earnings estimate for the to-be-reported quarter has remained stable over the past 60 days. The bottom-line projection indicates year-over-year growth of 35%. The Zacks Consensus Estimate for quarterly revenues suggests a modest year-over-year increase of 0.4%.
Image Source: Zacks Investment Research
For the current year, the Zacks Consensus Estimate for GM’s revenues is pegged at $176.4 billion, implying a rise of 2.7% year over year. The consensus mark for 2024 EPS is pegged at $9.38, implying growth of around 22.8% on a year-over-year basis.
In the trailing four quarters, this U.S. legacy automaker surpassed EPS estimates on all occasions, with the average earnings surprise being 17.75%.
Our proven model does not predict an earnings beat for General Motors this time around. 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. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
In the second quarter of 2024, General Motors reported its best U.S. quarterly sales in more than three years, driven by strong demand for full-size pickup trucks and electric vehicles (EVs).The company sold 696,086 units during the quarter under discussion, up 0.6% year over year. Approximately 229,000 full-size pickup trucks were delivered, up 6% year over year, marking the highest quarterly sales since 2021.EV deliveries rose 40% year over year to 21,930 units, fueled by robust sales of electric Hummer and LYRIQ.
Our estimate for wholesale vehicle sales volumes in the GMNA (General Motors North America) segment is 845,000 units, suggesting a year-over-year uptick of 1.5%. We project revenues from the GMNA segment to be $37.5 billion, implying an increase of roughly 1%. Operating income from the unit is estimated at $3.37 billion, calling for growth of 5.6%.
While sales in North America are likely to have provided a boost, weak deliveries in China are expected to limit overall revenues. GM and its joint venture delivered around 373,000 vehicles in China in the second quarter, down 29% year over year. All of GM's brands in China saw significant declines. Buick deliveries were about 81,000, down from 136,000 in the previous year. Chevrolet delivered almost 10,000 vehicles, down year over year from 48,000. Cadillac delivered about 29,000 vehicles, down year over year from 55,000.
We also expect sales volumes from the GMI unit (excluding China JV) to be down roughly 7% in the quarter to be reported. Our projections call for a contraction of 7% and 38% in revenues and operating income, respectively, year over year.
Price Performance & Valuation
On a year-to-date basis, shares of GM have surged 44%, outperforming the industry. It has also performed better than its major peers, including Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) .
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation perspective, General Motors is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.32, below its median of 0.34 over the last five years. It is also trading at a discount compared to the industry’s 1.53. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investor Considerations
General Motors' robust portfolio, encompassing EVs and internal combustion engine models, along with the high demand for its quality pickups and SUVs, are likely to drive the company. We are also optimistic about the company’s target to deliver on its $2 billion net cost reduction program by the end of this year. To add to its strengths, GM had more than $33 billion in automotive liquidity as of Mar 31, 2024, ensuring resilience against economic cycles.
GM’s Ultium Drive system and battery plants in Ohio, Tennessee and Lansing are likely to scale up its e-mobility prowess. However, recent comments by CEO Mary Barra have raised doubts over the company’s EV production target of 1 million by 2025. Speaking about the slowdown in EV growth, Barra said, “We won’t get to a million just because the market is not developing, but it will get there.” High capital and R&D expenditure, challenges in its Cruise unit and stiff competition in China are further headwinds.
Last Word
While GM is attractively valued and has strong fundamentals, it may not be the right time to buy the stock. The EV push has been a major tailwind for the stock but the recent comments by CEO Mary Barra have raised questions about the company's ambitious EV production goal. This could impact near-term sentiment. More details about GM's EV plans are expected when the company reports its second-quarter results on Jul 23. Therefore, it might be prudent to wait for the earnings report before making an investment decision.
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General Motors (GM) Pre-Q2 Earnings Analysis: Should You Buy?
General Motors (GM - Free Report) is slated to release second-quarter 2024 results on Jul 23, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $2.59 per share and $45 billion, respectively.
The earnings estimate for the to-be-reported quarter has remained stable over the past 60 days. The bottom-line projection indicates year-over-year growth of 35%. The Zacks Consensus Estimate for quarterly revenues suggests a modest year-over-year increase of 0.4%.
For the current year, the Zacks Consensus Estimate for GM’s revenues is pegged at $176.4 billion, implying a rise of 2.7% year over year. The consensus mark for 2024 EPS is pegged at $9.38, implying growth of around 22.8% on a year-over-year basis.
In the trailing four quarters, this U.S. legacy automaker surpassed EPS estimates on all occasions, with the average earnings surprise being 17.75%.
General Motors Company Price and EPS Surprise
General Motors Company price-eps-surprise | General Motors Company Quote
Earnings Whispers for Q2
Our proven model does not predict an earnings beat for General Motors this time around. 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. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
GM has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors to Shape GM’s Q2 Results
In the second quarter of 2024, General Motors reported its best U.S. quarterly sales in more than three years, driven by strong demand for full-size pickup trucks and electric vehicles (EVs).The company sold 696,086 units during the quarter under discussion, up 0.6% year over year. Approximately 229,000 full-size pickup trucks were delivered, up 6% year over year, marking the highest quarterly sales since 2021.EV deliveries rose 40% year over year to 21,930 units, fueled by robust sales of electric Hummer and LYRIQ.
Our estimate for wholesale vehicle sales volumes in the GMNA (General Motors North America) segment is 845,000 units, suggesting a year-over-year uptick of 1.5%. We project revenues from the GMNA segment to be $37.5 billion, implying an increase of roughly 1%. Operating income from the unit is estimated at $3.37 billion, calling for growth of 5.6%.
While sales in North America are likely to have provided a boost, weak deliveries in China are expected to limit overall revenues. GM and its joint venture delivered around 373,000 vehicles in China in the second quarter, down 29% year over year. All of GM's brands in China saw significant declines. Buick deliveries were about 81,000, down from 136,000 in the previous year. Chevrolet delivered almost 10,000 vehicles, down year over year from 48,000. Cadillac delivered about 29,000 vehicles, down year over year from 55,000.
We also expect sales volumes from the GMI unit (excluding China JV) to be down roughly 7% in the quarter to be reported. Our projections call for a contraction of 7% and 38% in revenues and operating income, respectively, year over year.
Price Performance & Valuation
On a year-to-date basis, shares of GM have surged 44%, outperforming the industry. It has also performed better than its major peers, including Ford (F - Free Report) , Stellantis (STLA - Free Report) and Toyota (TM - Free Report) .
YTD Price Comparison
Image Source: Zacks Investment Research
From a valuation perspective, General Motors is trading relatively cheap. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.32, below its median of 0.34 over the last five years. It is also trading at a discount compared to the industry’s 1.53. The company has a Value Score of A.
Image Source: Zacks Investment Research
Investor Considerations
General Motors' robust portfolio, encompassing EVs and internal combustion engine models, along with the high demand for its quality pickups and SUVs, are likely to drive the company. We are also optimistic about the company’s target to deliver on its $2 billion net cost reduction program by the end of this year. To add to its strengths, GM had more than $33 billion in automotive liquidity as of Mar 31, 2024, ensuring resilience against economic cycles.
GM’s Ultium Drive system and battery plants in Ohio, Tennessee and Lansing are likely to scale up its e-mobility prowess. However, recent comments by CEO Mary Barra have raised doubts over the company’s EV production target of 1 million by 2025. Speaking about the slowdown in EV growth, Barra said, “We won’t get to a million just because the market is not developing, but it will get there.” High capital and R&D expenditure, challenges in its Cruise unit and stiff competition in China are further headwinds.
Last Word
While GM is attractively valued and has strong fundamentals, it may not be the right time to buy the stock. The EV push has been a major tailwind for the stock but the recent comments by CEO Mary Barra have raised questions about the company's ambitious EV production goal. This could impact near-term sentiment. More details about GM's EV plans are expected when the company reports its second-quarter results on Jul 23. Therefore, it might be prudent to wait for the earnings report before making an investment decision.