General Motors Anticipates Q3 Earnings Amid Market Challenges and EV Growth
$GM
General Motors (NYSE: GM) is set to release its third-quarter results for 2024 tomorrow before the market opens, with analysts projecting an earnings per share (EPS) of $2.50 and revenues of approximately $44.7 billion. These figures reflect a year-over-year EPS growth of 9.6% and a modest revenue increase of 1.26%.
In the U.S. market, General Motors’ vehicle sales saw a slight decline of 2.2%, totaling 659,601 units, outperforming the industry expectation of a 3% drop. This performance was bolstered by a remarkable 60% increase in electric vehicle (EV) sales, driven by models such as the Chevrolet Equinox EV, Chevrolet Blazer EV, and Cadillac Lyriq.
Conversely, GM’s performance in China presents a stark contrast, with a significant 21.2% decline in vehicle deliveries, totaling approximately 426,000 units. This downturn affected all GM brands in the region, despite a slight increase in deliveries from its SAIC-GM-Wuling joint venture.
Financially, GM’s North American operations are anticipated to remain resilient, with projected revenues of $36.5 billion (up 1.3%) and an operating income of $3.82 billion (an 8.3% increase), while international operations are expected to experience a 12.5% decrease in wholesale volumes.
On the valuation front, General Motors’ shares have surged 37% year-to-date, outperforming competitors like Ford (NYSE: F), Stellantis (NYSE: STLA), and Toyota (NYSE: TM). The company’s forward sales multiple currently stands at 0.32, slightly below its five-year median of 0.33 and significantly lower than the industry average of 1.57. Despite robust performance in traditional and EV markets, General Motors faces challenges, including expected price reductions, rising commodity costs, and increased marketing expenditures that could pressure profitability in upcoming quarters.
Additionally, the company’s autonomous driving subsidiary, Cruise, continues to operate at a loss, and ongoing difficulties in the Chinese market add to the uncertainties.. The company’s strategic focus on both traditional and electric vehicles, along with efforts to improve EV profitability, will be critical as it aims for mid-single-digit EV margins by 2025.
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