Why has General Motors Company (GM) grown 8.1% since the last earnings report?
A month has passed since the last General Motors Company (GM) earnings report. Stocks rose about 8.1% during that time, outperforming the S&P 500.
Will the recent positive trend continue until its next earnings release, or does General Motors Company have to take a setback? Before we dive into how investors and analysts have reacted in recent times, let’s take a quick look at his latest earnings report to better understand the important catalysts.
General Motors beats first quarter profits, Mark misses sales
General Motors announced adjusted earnings of $ 2.25 per share for the first quarter of 2021, beating Zacks’ consensus estimate of $ 1.02. Net income was also significantly higher than last year’s 62 cents per share earnings, amid cost containment efforts and strong demand for SUVs and pickup trucks.
However, revenues of $ 32,474 million did not reach Zacks’ consensus estimate of $ 33,260 million. Revenue also slipped from $ 32,709 million a year ago. The company reported adjusted earnings before interest and taxes (EBIT) of $ 4,417 million, up sharply from $ 1,250 million in the prior year quarter. The benefit can be attributed to the introduction of SUVs, efficient pricing of pickup trucks, and high prices for used cars.
The automaker’s market share in the GM market was 10.1% for the reported quarter, down from 10.4% in the period a year earlier.
GM North America (GMNA) generated net revenues of $ 25,957 million in the first quarter, compared to $ 25,831 million recorded in the corresponding period of 2020. In addition, the unit’s revenues exceeded the consensus estimate of Zacks of $ 23,811 million. While the region’s vehicle wholesale sales of 664,000 units declined from 775,000 units in the same quarter last year, segment operating profit increased 42.8% to 3,134 millions of dollars. Segment profit also broke the consensus mark of $ 1,917 million. The results marked an improvement mainly due to the newly launched full-size SUVs and improved pickup prices due to tight inventory and high demand for the same.
GM International(GMI’s) net revenue for the reported quarter was $ 3,086 million, down from $ 3,280 million in the last year’s quarter due to lower vehicle sales year-on-year. the other. The unit achieved operating profit of $ 308 million compared to a loss of $ 551 million a year ago and the consensus estimate of a loss of $ 42 million due to high prices, launches vehicles and benefits from cost control actions.
GM Financial generated net revenues of $ 3,407 million for the end of March quarter, down from $ 3,561 million a year earlier. Nonetheless, the segment posted operating income of $ 1,182 million, rising from $ 230 million in the prior year quarter and exceeding the consensus mark of $ 871 million. This recovery was the result of the positive impact of high used vehicle prices, strong credit performance and lower interest charges.
GM Cruise reported net income of $ 30 million for the first quarter, up from $ 25 million the year before. The segment recorded an operating loss of $ 229 million, compared to a loss of $ 228 million recorded in the previous year quarter.
General Motors had $ 21.6 billion in cash and cash equivalents as at March 31, 2021, compared to $ 19.9 billion at the end of 2020. Long-term auto debt at the end of the quarter under review was $ 16.4 billion compared to $ 16.2 billion as of December 31, 2020.
General Motors auto cash stood at $ 37.2 billion at the end of the January-March quarter. Company recorded negative adjusted automotive free cash flow (FCF) of $ 1.9 billion for the first quarter of 2021, compared to unfavorable FCF of $ 903 million in the prior year period .
The company forecasts 2021 adjusted EBIT and EPS per share in the range of $ 10 billion to $ 11 billion and $ 4.5 to 5.25, respectively. The adjusted automotive FCF is estimated to be between $ 1 billion and $ 2 billion.
How have the estimates evolved since?
As it turns out, new estimates have trended downward over the past month. The consensus estimate has changed by -38.08% due to these changes.
Currently, General Motors Company has an excellent growth score of A, although it is far behind on the Momentum score front with a D. However, the stock received an A rating on the value side, this which places it in the top quintile for this investment strategy.
Overall, the stock has an overall VGM score of A. If you’re not strategy-focused, this score is the one you should be interested in.
The estimates have had a general downward trend for the stock, and the magnitude of these revisions indicates a downward change. Notably, General Motors Company has a Zacks Rank # 2 (Buy). We expect an above-average return on the security over the next few months.
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