GM - GM Q3 earnings on desk what to expect
2023-10-23 09:43:56 ET
General Motors Company ( NYSE: GM ) is set to report its third quarter results on Tuesday before markets open and investors are expecting commentaries regarding impact and mitigating strategies related to the ongoing United Auto Workers strike.
Wall Street expects the Detroit auto giant to report third-quarter EPS of $1.84, implying a drop of 18.2%, while revenue is expected to rise 3.2% to $43.25 billion.
“We believe the automaker's profitability may be drastically impacted, attributed to the additional costs associated with the strike and raised wages, potentially affecting its ability to sustain its dividend payouts and share repurchases,” pointed out a recent Seeking Alpha analysis.
The United Auto Workers union first launched a strike against General Motors, Ford ( F ) and Stellantis ( STLA ) on September 15, demanding higher pay and a shorter work week.
According to an analysis by J.P. Morgan, the strike has cost General Motors about $191 million of operating earnings during the quarter.
Earlier in July, General Motors delivered $3.2B in EBIT-adjusted in the second-quarter and said it expects EBIT-adjusted of $12B to $14B for the full year vs. $11.0B to $13.0B prior view and $11.9B consensus.
General Motors added it continues to target production of roughly 100K EVs in the second half of this year before growing the EV business even further.
Investors will also look for guidance regarding vehicle sales and capital expenditure, given the fact that the strikes poses a long-term concern for General Motors.
GM's earnings report is coming days after EV giant Tesla ( TSLA ) reported a decline in operating margin, but held full-year deliveries guidance.
Over the last two years, General Motors has beaten EPS estimates 88% of the time and has beaten revenue estimates 63% of the time.
Seeking Alpha analysts rate the stock as “Hold”, while Wall Street and Seeking Alpha’s Quant ratings consider it a “Buy” and above. The stock has fallen more than 10% so far this year.
Over the last three months, EPS estimates have seen 13 upward revisions and one downward revision. Revenue estimates have seen three upward revisions versus four downward moves.
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GM Q3 earnings on desk, what to expect