What to expect from GM’s earnings – MarketWatch

Posted: Tuesday, April 19, 2016

A previous version of this article misstated the day of the week GM is reporting. It has been corrected.

Getty Images

U.S. car sales rose in March, but that trend may not continue.

General Motors Co. is scheduled to report first-quarter earnings before the bell Thursday.

Investors will be watching GM

GM, +2.11%

 for any clues about future car sales and the company’s expectations for demand, and especially for any indication U.S. sales could have plateaued.

U.S. car sales rose in March, but there’s worry that the blistering pace will not continue, despite lower gasoline prices, an improving job market and still-low interest rates that have boosted sales so far.

Here’s what to expect from GM earnings:

Earnings: Analysts polled by FactSet expect GM to report adjusted earnings of $1 a share in the first quarter, which would be up from 86 cents a share in the year-ago period.

Estimize, which crowdsources estimates from analysts, fund managers, and academics, expects GM to report earnings of $1.05 a share, based on 18 estimates.

Sales: The FactSet analysts forecast GM sales to reach $35 billion in the first quarter, compared with $34.36 billion in the first quarter of 2015. North American sales, the bulk of the car maker’s revenue, are seen relatively flat to $24.77 billion from $24.67 billion a year ago.

According to Estimize, GM sales will reach $36.5 billion in the quarter.

Stock price: Fears of a slowdown in U.S. auto sales have dogged GM shares so far this year: They are down 8%, contrasting with gains of 2.5% for the S&P 500 index

SPX, +0.31%

 in the same period. GM shares have declined 14% in the past 12 months, versus gains of 0.6% for the index.

Other issues: GM has intentionally reduced U.S. fleet sales while emphasizing U.S. retail car sales, which is likely to lead to better prices despite lower volumes, said David Whiston, an analyst at Morningstar.

It will be interesting to see whether the pricing improvements will be enough to offset the lower volumes and lead to profit growth, he said.

“The U.S. is the key market for earnings, and as 2016 unfolds I’m looking for strong results due to more profitable cars, such as Malibu and Cruze, in addition to continued strong light-truck demand due to cheap gas,” Whiston said.

GM is likely to report “a contrast of markets,” said Bill Selesky, an analyst with Argus Research. The company is expected to report strength in the U.S. market, with continued market share gains, but is likely to report relatively weak sales in China, he said.


Write a Reply or Comment:

Your email address will not be published.*