General Motors Shines Brighter than the Competition
Investors eagerly anticipated Tesla’s quarterly results after the bell on Tuesday, yet General Motors emerged as a top contender with its stellar Q1 performance.
General Motors stock skyrocketed over +4% today, boasting a remarkable +25% surge year-to-date, outpacing its rival Ford Motor’s modest +6% increase. Meanwhile, Tesla faced a daunting -41% decline due to sluggish sales growth and a recent setback in its cyber truck release.
The Rise and Shine of Q1 Numbers
Under CEO Mary Barra’s guidance, General Motors achieved a stellar 10.6% EBIT margin in Q1, attributing its success to operational efficiency and a robust lineup of full-size pickups. Coupled with growth in midsize pickups, SUVs, and enhanced profitability in the EV sector, General Motors reported a net income of $3 billion or $2.62 per share, surpassing the Zacks Consensus estimate by an impressive 26%.
Comparing year-over-year, Q1 earnings soared 18% from the prior year to $2.21 per share. Additionally, Q1 sales of $43 billion exceeded expectations by 4% and rose 7% YoY, marking the seventh consecutive quarter where General Motors outperformed its financial targets.
Growth Trajectory and Optimistic Guidance
General Motors raised its fiscal 2024 EPS outlook to $9.00-$10.00 per share from $8.50-$9.50, indicating a robust 19% growth potential from 2023. This positive trajectory is further supported by raised guidance in adjusted EBIT, automotive operating cash flow, and adjusted automotive free cash flow.
A Diamond in the Rough
Despite the substantial YTD gain in General Motors stock, it remains a bargain at just 4.7X forward earnings, a significant discount compared to the industry average of 13.7X and even Ford’s 6.8X. Moreover, the recent surge in EPS estimates for General Motors’ FY24 and FY25 reaffirms its undervalued status in the market.
Final Thoughts
General Motors epitomizes the qualities of a value stock, while embarking on a return to growth that investors have long awaited. With a Zacks Rank #2 (Buy) and an Average Zacks Price Target of $50.54 per share, there is a promising potential for 17% upside from current levels.
