Thursday, February 22nd, 2024

General Motors Prepares to Unveil Earnings Report: Wall Street’s Anticipations

General Motors (GM) is poised to announce its earnings before the bell, and Wall Street has set expectations based on average estimates compiled by LSEG (formerly known as Refinitiv).

Analysts anticipate adjusted earnings per share to be $1.16, with revenue reaching $38.67 billion. If these projections hold, it would represent a 10.3% decline in revenue compared to the previous year and a substantial 45.3% decrease in adjusted earnings per share. In the fourth quarter of 2022, GM reported $43.11 billion in revenue, net income attributable to stockholders of $2 billion, and adjusted earnings before interest and taxes amounting to $3.8 billion.

Beyond the financial figures, investors are particularly keen on uncovering any residual or unexpected costs stemming from GM’s new labor contract, forged last year with the United Auto Workers union. Additionally, attention is directed toward the company’s guidance for 2024.

Analysts predict a relatively steady forecast from GM compared to the earnings of the previous year. While advantageous vehicle pricing has led to record profits recently, the normalization of such pricing is anticipated. Concurrently, cost-cutting measures are expected to counterbalance elevated labor costs resulting from the UAW deal.

GM CEO Mary Barra, in a statement last November, mentioned the company’s ongoing efforts to finalize a budget for 2024 that would effectively offset the incremental costs associated with the new labor agreements.

In November, GM reinstated its 2023 guidance, including net income attributable to stockholders ranging from $9.1 billion to $9.7 billion, or EPS of $6.52 to $7.02. Adjusted earnings before interest and taxes were estimated to be between $11.7 billion and $12.7 billion, or $7.20 to $7.70 adjusted EPS, with adjusted automotive free cash flow falling within the range of $10.5 billion to $11.5 billion.

This guidance encompassed an estimated $1.1 billion EBIT-adjusted effect resulting from approximately six weeks of U.S. labor strikes, along with some costs related to an accelerated $10 billion share repurchase program announced in November.

Investors are also eager for updates on GM’s new electric vehicles and Cruise, GM’s majority-owned autonomous vehicle subsidiary, which is currently under scrutiny following an October accident involving a pedestrian in San Francisco.

Last week, Cruise and GM released findings from internal investigations into the incident, highlighting cultural issues, regulatory challenges, and leadership deficiencies. While the investigation did not reveal intentional deception or misleading actions, Cruise remains under scrutiny by various entities, including the U.S. Department of Justice and the U.S. Securities and Exchange Commission.