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General Motors (GM) Down 4.3% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for General Motors Company (GM - Free Report) . Shares have lost about 4.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
General Motors Q1 Earnings & Revenues Top, View Same
General Motors posted record adjusted earnings of $1.70 per share in the first quarter of 2017 that surpassed the Zacks Consensus Estimate of $1.45. Earnings in the reported quarter rose 34.9% from $1.26 per share recorded in the first quarter of 2016.
Net income (on a reported basis) amounted to $2.6 billion or $1.70 per share, up from $1.95 billion or $1.24 per share in the year-ago quarter.
Revenues in the reported quarter were a first-quarter record of $41.2 billion, 10.6% higher than $37.3 billion in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $40.25 billion.
Worldwide wholesale unit sales went up to 1.48 million vehicles, also a first-quarter record, from 1.41 million vehicles in the first quarter of 2016. Worldwide retail unit sales, however, moved down to 2.34 million vehicles from 2.38 million vehicles in the year-ago quarter. The automaker’s global market share was 10.4% during the reported quarter, slightly down from 10.6% in the year-ago quarter.
Adjusted earnings before interest and tax (EBIT) rose to $3.4 billion (8.2% of sales), also a first-quarter record, from $2.7 billion (7.1%) in first-quarter 2016.
Segment Results
GM North America (“GMNA”) reported a 10.6% rise in revenues to $29.3 billion during the first quarter of 2017. Adjusted EBIT rose to $3.4 billion from $2.3 billion in the year-ago quarter.
GM Europe (“GME”) witnessed a 4.3% fall in revenues to $4.5 billion in the quarter. The segment reported an adjusted loss of $0.2 billion, against the breakeven recorded in the year-ago quarter.
GM International Operations (“GMIO”) reported a 7.4% decline in revenues to $2.5 billion. Adjusted EBIT was $0.3 billion, down from $0.4 billion in the year-ago quarter.
GM South America (“GMSA”) witnessed 53.8% growth in revenues to $2 billion. The segment reported an adjusted loss of $0.1 billion, flat year over year.
GM Financial reported an impressive 38.1% rise in revenues to $2.9 billion during the quarter. The segment’s EBIT was $0.3 billion, up 50% from the year-ago quarter.
Financial Position
General Motors had cash and cash equivalents of $12.86 billion as of Mar 31, 2017 compared with $12.96 billion as of Dec 31, 2016. Total debt (Automotive and Financial) increased to $90.9 billion as of Mar 31, 2017, from $84.63 billion as of Dec 31, 2016.
During first-quarter 2017, net cash from operating activities was $2.04 billion, compared with $108 million used in the comparable year-ago period. Capital expenditures amounted to $1.98 billion in first-quarter 2017, compared with $2.27 billion in the same period a year ago.
2017 Outlook
General Motors continues to expect 2017 adjusted earnings per share in the range of $6.00–$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 company aims capital deployment worth $7 billion to shareholders in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.
At this time, General Motors' stock has an average Growth Score of 'C', however its Momentum is doing a lot better with an 'A'. Following the exact same course, the stock was allocated also 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 and momentum investors than growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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General Motors (GM) Down 4.3% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for General Motors Company (GM - Free Report) . Shares have lost about 4.3% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 catalysts.
General Motors Q1 Earnings & Revenues Top, View Same
General Motors posted record adjusted earnings of $1.70 per share in the first quarter of 2017 that surpassed the Zacks Consensus Estimate of $1.45. Earnings in the reported quarter rose 34.9% from $1.26 per share recorded in the first quarter of 2016.
Net income (on a reported basis) amounted to $2.6 billion or $1.70 per share, up from $1.95 billion or $1.24 per share in the year-ago quarter.
Revenues in the reported quarter were a first-quarter record of $41.2 billion, 10.6% higher than $37.3 billion in the year-ago quarter. Revenues also surpassed the Zacks Consensus Estimate of $40.25 billion.
Worldwide wholesale unit sales went up to 1.48 million vehicles, also a first-quarter record, from 1.41 million vehicles in the first quarter of 2016. Worldwide retail unit sales, however, moved down to 2.34 million vehicles from 2.38 million vehicles in the year-ago quarter. The automaker’s global market share was 10.4% during the reported quarter, slightly down from 10.6% in the year-ago quarter.
Adjusted earnings before interest and tax (EBIT) rose to $3.4 billion (8.2% of sales), also a first-quarter record, from $2.7 billion (7.1%) in first-quarter 2016.
Segment Results
GM North America (“GMNA”) reported a 10.6% rise in revenues to $29.3 billion during the first quarter of 2017. Adjusted EBIT rose to $3.4 billion from $2.3 billion in the year-ago quarter.
GM Europe (“GME”) witnessed a 4.3% fall in revenues to $4.5 billion in the quarter. The segment reported an adjusted loss of $0.2 billion, against the breakeven recorded in the year-ago quarter.
GM International Operations (“GMIO”) reported a 7.4% decline in revenues to $2.5 billion. Adjusted EBIT was $0.3 billion, down from $0.4 billion in the year-ago quarter.
GM South America (“GMSA”) witnessed 53.8% growth in revenues to $2 billion. The segment reported an adjusted loss of $0.1 billion, flat year over year.
GM Financial reported an impressive 38.1% rise in revenues to $2.9 billion during the quarter. The segment’s EBIT was $0.3 billion, up 50% from the year-ago quarter.
Financial Position
General Motors had cash and cash equivalents of $12.86 billion as of Mar 31, 2017 compared with $12.96 billion as of Dec 31, 2016. Total debt (Automotive and Financial) increased to $90.9 billion as of Mar 31, 2017, from $84.63 billion as of Dec 31, 2016.
During first-quarter 2017, net cash from operating activities was $2.04 billion, compared with $108 million used in the comparable year-ago period. Capital expenditures amounted to $1.98 billion in first-quarter 2017, compared with $2.27 billion in the same period a year ago.
2017 Outlook
General Motors continues to expect 2017 adjusted earnings per share in the range of $6.00–$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 company aims capital deployment worth $7 billion to shareholders in 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.
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', however its Momentum is doing a lot better with an 'A'. Following the exact same course, the stock was allocated also 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 and momentum investors than growth investors.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of these revisions looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.