General Motors GM is all set to reveal its financial results for the fourth quarter of 2023 on Jan 30, before the market opening. Market analysts have estimated the earnings and revenues for the quarter at $1.09 per share and $43.34 billion, respectively.
Recent revisions indicate an increase of 3 cents in the last seven days for General Motors’ fourth-quarter earnings per share. The forecast predicts a 48.58% decline in year-over-year earnings and a 6.42% decrease in revenues.
In the preceding quarter, GM outperformed earnings expectations due to higher-than-anticipated profits from the GM North America (“GMNA”), GM International (“GMI”), and GM Financial segments. Throughout the past year, the company has consistently exceeded the Zacks Consensus Estimate, with an average surplus of 23.82%.
Trends in Company Performance
General Motors’ fourth-quarter sales in the United States rose by 0.3% to 625,176 units year-over-year. Notably, sales from the Buick brand climbed by 57%. Total Silverado sales increased to 143,390 units from 141,912 units in the previous year, while Sierra’s total sales escalated by 9.8%.
Conversely, sales in China, the largest automobile market globally, witnessed a decline year-over-year. In China, General Motors sold 568,850 vehicles, marking a 1% decrease from the previous year. Sales across the Chevrolet, Buick, and Cadillac brands experienced reductions, while sales across Wuling & Baojun registered growth by 8.08% and 84.81%, respectively.
The operating income from the GMNA segment is expected to amount to $2.66 billion, reflecting an 8% decline year-over-year. Furthermore, the impact of the United Auto Workers strike, starting on Sep 15, 2023, which lasted for six weeks, is anticipated to result in a substantial setback in the fourth quarter, with an additional $600 million reduction in EBIT. Whereas, the operating income from the GMI segment (excluding GM China joint venture) is projected to reach $309.7 million, showcasing a 13.9% increase year-over-year.
General Motors anticipates that its lost production due to the strike, which will likely make a significant impact in the fourth quarter, with an additional $600 million reduction in EBIT. Hence, the operating margin is expected to expand by 0.9 percentage points from the year-ago quarter to 7.2%.
Furthermore, the projection for sales from the GM Financial unit is pegged at $3.21 billion, indicating a rise of 7.9% year-over-year. Estimations for sales from GM’s autonomous driving unit, Cruise, remains at $25 million, with no change from the previous year.
Moreover, building on the triumph of its $2 billion cost-reduction plan announced in early 2023, General Motors plans to further slash $1 billion in fixed costs over the 2023 to 2024 timeframe. This cost-saving initiative is expected to positively influence GM’s fourth-quarter margins.
Earnings Analysis and Projections
Our data projects a potential earnings beat for General Motors this season. The successful combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) amplifies the likelihood of an earnings beat, which is anticipated in this case.
With a noteworthy Earnings ESP of +3.47%, the Most Accurate Estimate of $1.12 per share surpasses the Zacks Consensus Estimate by 3 cents. Additionally, General Motors currently holds a Zacks Rank #2, further showcasing its positive potential for outperforming earnings projections.
Other Companies to Watch
Looking ahead, additional players in the auto industry with favorable combination projections to potentially exceed earnings this quarter include Lear Corporation, Ford Motor Company, and BorgWarner Inc. The comprehensive details for these contributing organizations are as follows:
LEA is scheduled to release its fourth-quarter 2023 results on Feb 6. The company has an Earnings ESP of +1.36% and a Zacks Rank #3. Market analysts have projected earnings and revenues for the to-be-reported quarter at $3.08 per share and $5.64 billion, respectively. Notably, LEA has outperformed earnings estimates consistently, with an average surprise of 9.10%.
Similarly, F is due to release its fourth-quarter 2023 results on Feb 6. The company holds an Earnings ESP of +4.93% and a Zacks Rank #3. The consensus estimate for Ford’s to-be-reported quarter’s earnings and revenues stands at 12 cents per share and $36.39 billion, respectively. Ford has previously surpassed earnings estimates twice in the trailing four quarters and missed twice, with the average surplus at 20.30%.
Lastly, BWA is in line to release its fourth-quarter 2023 results on Feb 8. The company recorded an Earnings ESP of +2.44% and a Zacks Rank #3. Estimates for BorgWarner’s fourth-quarter earnings and revenues is at 91 cents per share and $3.59 billion, respectively. The company has outperformed earnings estimates three times in the previous four quarters and missed once, with an average surprise of 10.93%.
To stay updated with upcoming earnings announcements, refer to the Zacks Earnings Calendar.
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