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Why Is General Motors Company (GM) Up 5.9% Since Last Earnings Report?

A month has gone by since the last earnings report for General Motors Company (GM). Shares have added about 5.9% in that time frame, outperforming the S&P 500.

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

General Motors Q3 Earnings Top Estimates

General Motors reported third-quarter 2022 adjusted earnings of $2.25 per share, surpassing the Zacks Consensus Estimate of $1.89. Higher-than-expected revenues and profit from the North America segment, and higher-than-expected profit from the International segment led to the upswing. The bottom line surged 48% from the year-ago quarter’s earnings of $1.52 per share.

Revenues of $41,889 million beat the Zacks Consensus Estimate of $41,833.3 million. The top line soared 56.4% from the year-ago figure of $26,779 million. The company recorded adjusted earnings before interest and taxes (EBIT) of $4,287 million, significantly higher than $2,922 million in the prior-year quarter.

The automaker’s share in the GM market was 9.4% in the reported quarter, up from the year-ago quarter’s 8.4%.

Segmental Performance

GM North America (GMNA) generated third-quarter net revenues of $34,691 million, up from $20,554 million recorded in the corresponding period of 2021. Also, revenues from the unit outpaced the Zacks Consensus Estimate of $34,024 million. The region’s wholesale vehicle sales of 784,000 units increased from 423,000 units reported in the year-ago quarter. The segment’s operating profit came in at $3,894 million, increasing from $2,125 million witnessed in the year-earlier period. The segmental profit also beat the consensus mark of $3,751 million.

GM International’s (GMI) net revenues in the reported quarter came in at $3,980 million, up from the year-ago quarter’s $2,843 million. The metric, however, fell short of the consensus mark of $5,237 million. The segment’s wholesale vehicle sales of 182,000 units increased from 113,000 units in the year-ago quarter. The unit reported an operating profit of $334 million, rising from the year-ago profit of $229 million. The metric also topped the consensus mark of $177 million.

GM Financial generated net revenues of $3,187 million in the quarter, down from $3,354 million recorded in the year-ago period and missed the consensus mark of $3,304 million. Also, the segment recorded an EBIT-adjusted operating profit of $911 million, down from $1,093 million and missed the consensus mark of $968 million.

GM Cruise recorded net revenues of $25 million in the third quarter, down from $26 million and missed the consensus mark of $37.84 million. The segment posted an operating loss of $497 million, wider than the $286 million loss reported in the prior-year quarter. The reported loss also came in wider than the consensus mark of a loss of $432 million.

Financial Position

General Motors had cash and cash equivalents of $20,745 million as of Sep 30, 2022, compared with $20,067 million as of Dec 31, 2021. The long-term automotive debt at the end of the quarter was $18,333 million compared with $16,355 million as of Dec 31, 2021.

General Motors’ automotive cash provided by operating activities amounted to $6,502 million at the end of the reported quarter against $2,602 million cash used in operating activities in the year-ago period. The company recorded an adjusted automotive free cash flow of $4,593 million in third-quarter 2022 against a negative cash flow of $4,385 million generated in the third quarter of 2021.

2022 Guidance

For 2022, General Motors’ full-year net income projection remains same in the range of $9.6-$11.2 billion. The adjusted EBIT forecast remains unchanged in the range of $13.0 billion to $15.0 billion. The adjusted EPS estimate also remained unchanged in the band of $6.5-$7.5. Adjusted automotive free cash flow remains between $7 billion and $9 billion.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, General Motors Company has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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

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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