General Motors GM is set to unveil its fourth-quarter 2023 results on Jan 30, prior to the market’s opening. Analysts estimate the quarter’s earnings and revenues at $1.09 per share and $43.34 billion, respectively.
The consensus prediction for General Motors’ fourth-quarter earnings per share has been lifted by 3 cents in the past seven days. This estimation indicates a 48.58% year-over-year decrease in earnings and a 6.42% dip in revenues.
In the previous quarter, GM exceeded earnings expectations, largely due to higher-than-expected profits from the GM North America (“GMNA”), GM International (“GMI”), and GM Financial segments. Over the last four quarters, the company has consistently outperformed the Zacks Consensus Estimate, averaging at 23.82%.
General Motors Company Price and EPS Surprise
General Motors Company has shown a consistent trend of exceeding earnings estimates. [GRAPH]
Factors Impacting GM’s Q4 Performance
General Motors observed a 0.3% year-over-year rise in fourth-quarter sales in the United States, amounting to 625,176 units. Sales from the Buick brand soared by 57% during this period. Moreover, total Silverado sales expanded to 143,390 units, and Sierra’s total sales jumped by 9.8% year over year.
Conversely, sales in China, the world’s largest auto market, experienced a decline on a year-over-year basis. General Motors’ sales in China totaled 568,850 vehicles during the fourth quarter of 2023, reflecting a 1% decrease from the previous year. The company witnessed a decline in sales for the Chevrolet (27.44%), Buick (25.91%), and Cadillac (4.98%) brands, while Wuling & Baojun experienced sales growth of 8.08% and 84.81%, respectively.
The projected operating income from the GMNA segment is expected to be $2.66 billion, indicating an 8% year-over-year decline. Additionally, the United Auto Workers strike, which lasted for six weeks starting on Sep 15, 2023, is anticipated to significantly impact the fourth quarter, with an expected incremental $600 million reduction in EBIT.
The estimated operating income from the GMI segment (excluding GM China joint venture) is projected to be $309.7 million, reflecting a 13.9% year-over-year increase. The operating margin is expected to expand by 0.9 percentage points from the prior-year quarter to 7.2%.
Furthermore, the estimated sales from the GM Financial unit are expected to be $3.21 billion, indicating a 7.9% year-over-year rise. The forecast for sales from GM’s autonomous driving unit, Cruise, is set at $25 million, remaining unchanged from the previous year’s levels. Capitalizing on the success of its $2 billion cost-reduction plan announced in early 2023, General Motors plans to further reduce $1 billion in fixed costs over the 2023-2024 period, which is expected to positively impact GM’s fourth-quarter margins.
Earnings Whispers
Based on historical performance, our model predicts that General Motors will beat earnings estimates this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) enhances the probability of an earnings beat, which is the case here.
Earnings ESP: GM has an Earnings ESP of +3.47% as the Most Accurate Estimate of $1.12 per share is 3 cents higher than the Zacks Consensus Estimate.
Zacks Rank: General Motors currently holds a Zacks Rank #2.
Other Auto Stocks Worth Considering
Several other players in the auto industry are also poised to outperform earnings expectations this time around, according to our model.
For instance, Lear Corporation LEA will release its fourth-quarter 2023 results on Feb 6, equipped with an Earnings ESP of +1.36% and a Zacks Rank #3.
Similarly, Ford Motor Company F is set to release its fourth-quarter 2023 results on Feb 6, supported by an Earnings ESP of +4.93% and a Zacks Rank #3.
Moreover, BorgWarner Inc. BWA will unveil its fourth-quarter 2023 results on Feb 8, aided by an Earnings ESP of +2.44% and a Zacks Rank #3.
Stay up-to-date with upcoming earnings announcements through the Zacks Earnings Calendar.
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