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General Motors Company (GM) Down 6.9% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for General Motors Company (GM). Shares have lost about 6.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is General Motors Company due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

General Motors Q1 Earnings Top Estimates But Falls Y/Y

General Motors reported first-quarter 2022 adjusted earnings of $2.09 per share, topping the Zacks Consensus Estimate of $1.56. Better-than-expected contributions from North America, International and Financial segments drove the outperformance. The bottom line, however, compares unfavorably with the year-ago quarter’s earnings of $2.25 per share.

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Revenues of $35,979 million missed the Zacks Consensus Estimate of $36,252.5 million. The top line compares favorably with the year-ago figure of $32,474 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,044 million, lower than $4,417 million in the prior-year quarter.

The automaker’s share in the GM market was 9.1% in the reported quarter, slightly down from the year-ago quarter’s 9.9%.

Segmental Performance

GM North America (GMNA) generated first-quarter net revenues of $29,456 million, up from $25,957 million recorded in the corresponding period of 2021. Nonetheless, revenues from the unit lagged the Zacks Consensus Estimate of $34,263 million. The region’s wholesale vehicle sales of 694,000 units increased from 664,000 units reported in the year-ago quarter. The segment’s operating profit came in at $3,141 million, slightly higher than $3,134 million witnessed in the year-earlier period. The segmental profit also topped the consensus mark of $2,422 million.

GM International’s (GMI) net revenues in the reported quarter came in at $3,313 million, up from the year-ago quarter’s $3,086 million. The metric crossed the consensus mark of $3,209 million. The segment’s wholesale vehicle sales of 137,000 units declined from 157,000 units in the year-ago quarter. The unit reported an operating profit of $328 million, higher than the year-ago profit of $308 million. It missed the consensus mark of $348 million.

GM Financial generated net revenues of $3,156 million in the quarter, down from $3,407 million recorded in the year-ago period and missed the consensus mark of $3,355 million. Also, the segment recorded an EBIT-adjusted operating profit of $1,284 million, up from $1,182 million and beat the consensus mark of $850 million.

GM Cruise witnessed net revenues of $26 million in the first quarter, down from $30 million reported in the year-earlier period. The segment posted an operating loss of $325 million, wider than the $229 million loss reported in the prior-year quarter but narrower than the consensus mark of a loss of $335 million.

Financial Position

General Motors had cash and cash equivalents of $16,349 million as of Mar 31, 2022, compared with $20,067 million as of Dec 31, 2021. The long-term automotive debt at the end of the quarter was $16,155 million compared with $16,355 million as of Dec 31, 2021.

General Motors’ automotive cash provided by operating activities amounted to $1,635 million at the end of the reported quarter against $1,096 million of automotive cash used by operating activities in the prior-year period. The company recorded an adjusted automotive free cash flow of $6 million in first-quarter 2022 against a negative cash flow of $1,932 million in the year-ago period.

2022 Guidance

For 2022, the company expects full-year net income to be in a range of $9.6-$11.2 billion, higher than the previous range of $9.4-$10.8 billion. Adjusted EBIT forecast remains unchanged in the range of $13.0 billion to $15.0 billion. The estimate for adjusted EPS was increased from the previous range of $6.25-$7.25 to $6.5-$7.5.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, General Motors Company has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, General Motors Company has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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