General Motors (GM) is set to report its third-quarter 2024 earnings today before the market opens.
Investors are eager to see how the US automaker has performed in the face of economic headwinds and evolving market conditions.
According to Zacks Investment Research, the consensus estimate for GM’s earnings is pegged at $2.50 per share, with expected revenue of $44.7 billion for the quarter.
While earnings per share (EPS) estimates have been revised down slightly by 2 cents in the past week, the projection still reflects a year-over-year growth of 9.6%.
The revenue forecast suggests a modest increase of 1.26% compared to the same period last year.
Strong performance expected despite challenges
Despite a mixed sales environment, GM has delivered steady performance, especially in the North American market.
According to Zacks, GM’s US vehicle sales dropped by 2.2% in the third quarter but outperformed industry expectations.
The automaker saw strong demand for its electric vehicles (EVs) and compact crossovers, with EV sales jumping by 60% year-over-year.
In the US market, GM sold 32,095 EVs in Q3, including the Chevrolet Equinox EV and Cadillac Lyriq.
The company also delivered over 4,300 GMC Hummer EV pickups and SUVs.
This robust EV performance is expected to boost GM’s overall earnings, with estimates suggesting North American revenues will rise by 1.3% to $36.5 billion, and operating income may increase by 8.3%.
Weakness in China weighs on results
While GM’s North American operations remain strong, its performance in China continues to struggle.
The automaker saw a steep 21.2% drop in vehicle deliveries in the region, with significant year-over-year declines across its Buick, Chevrolet, and Cadillac brands.
GM has also reported losses in China during the first two quarters of 2024, and CEO Mary Barra warned of ongoing challenges in the region for the remainder of the year.
This underperformance in China is expected to impact GM’s international results.
Zacks estimates that GM’s international sales, excluding its China joint ventures, will see a decline of 12.5% in Q3.
What analysts are watching for
Zacks’ analysis suggests that investors should temper expectations for a major earnings beat this quarter, as GM lacks the combination of factors typically needed to surprise on the upside.
However, GM’s strong EV sales, robust liquidity, and strategic product portfolio provide reasons for long-term optimism.
The automaker continues to invest heavily in both electric and traditional vehicle lines.
Over the next year, GM plans to introduce eight new or redesigned gasoline-powered SUVs in North America to maintain profitability as it transitions to EVs.
Should you buy GM stock?
Source: TradingView
General Motors’ stock has surged 37% year-to-date, outperforming industry peers like Ford and Toyota.
Despite near-term challenges in China and rising costs associated with its EV transition, GM’s liquidity position and continued success in its core gas-powered vehicle segment offer stability.
Investors may want to hold off on any major moves until after the Q3 earnings release, which will provide more clarity on GM’s plans to overcome obstacles in the Chinese market and its outlook for the EV segment.
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