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What's in Store for General Motors (GM) This Earnings Season?

Zacks Equity Research
·4-min read

General Motors GM is slated to release second-quarter 2020 results on Jul 29, before the opening bell. The Zacks Consensus Estimate for the quarter’s loss is pegged at $1.76 per share on revenues of $20.34 billion.

The automaker delivered solid results in the last reported quarter on higher-than-anticipated profits in the North American segment. General Motors beat estimates in each of the trailing four quarters, the average surprise being 112.59%. This is depicted in the graph below:

General Motors Company Price and Consensus

General Motors Company Price and Consensus
General Motors Company Price and Consensus

General Motors Company price-consensus-chart | General Motors Company Quote

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for General Motors’ second-quarter loss per share has remained unrevised at $1.76 for the past week. This compares unfavorably with the year-ago quarter’s earnings per share of $1.64. The Zacks Consensus Estimate for revenues also suggests a year-over-year plunge of 43.58%.

Factors that Might Have Influenced Q2 Performance

General Motors is expected to have witnessed a decline in quarterly sales volumes amid industry headwinds. Heightening coronavirus fears are likely to have thwarted vehicle demand during this period. Lower vehicle sales amid a weakening consumer demand and soft economic conditions are expected to have hurt company’s quarterly revenues. General Motors also withdrew the 2020 guidance for the to-be-reported quarter.

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General Motors’ customer deliveries in the United States in the quarter under review plummeted 34% from the prior-year period to 492,489 deliveries, as the coronavirus outbreak marred demand for vehicles.

Further, the Zacks Consensus Estimate for the company’s Automotive segment’s net sales is pegged at $12.5 billion, suggesting a slump of 61.3% year on year. The consensus estimate for net sales in the International and North America segments are pegged at $2,540 million and $9,940 million for the second quarter, calling for a decline from the prior year’s $4,047 million and $28,324 million, respectively. Moreover, the Zacks Consensus Estimate for the Financial segment’s net sales is expected to be $2,347 million, suggesting a decline of 35.5% year over year.

Nonetheless, General Motors introduced vehicle financing programs to spur demand during such uncertain times in the quarter. The firm’s focus on cost-cutting efforts amid the pandemic is expected to have aided second-quarter margins to some extent.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for General Motors this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that is not the case here as elaborated below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP:General Motors has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank:General Motors carries a Zacks Rank of 3 (Hold) currently.

Stocks to Consider

Here are a few stocks worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

O’Reilly Automotive, Inc. ORLY has an Earnings ESP of +40.19% and carries a Zacks Rank #2 at present. The company is slated to release second-quarter 2020 earnings on Jul 29.

Penske Automotive Group, Inc. PAG has an Earnings ESP of +207.14% and currently carries a Zacks Rank #3. The company is scheduled to report quarterly numbers on Jul 29.

Group 1 Automotive, Inc. GPI has an Earnings ESP of +114.82% and carries a Zacks Rank #3 currently. The company is set to announce earnings figures on Jul 30.

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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
 
OReilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Group 1 Automotive, Inc. (GPI) : Free Stock Analysis Report
 
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Zacks Investment Research