General Motors Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and General Motors (NYSE: GM  ) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

General Motors has come a long way since emerging from bankruptcy after the financial crisis, but it still faces some major challenges to overall success. Let's take an early look at what's been happening with General Motors over the past quarter and what we're likely to see in its quarterly report on Thursday.

Stats on General Motors

 

 

Analyst EPS Estimate

$0.51

Change From Year-Ago EPS

31%

Revenue Estimate

$39.14 billion

Change From Year-Ago Revenue

3%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will General Motors drive higher this quarter?
Analysts have been relatively secure in their estimates for General Motors' most recent quarter, keeping earnings-per-share consensus stable despite pulling down EPS for full-year 2013 down by about a dime in the past three months. But that hasn't held the stock back from impressive gains, as GM has risen more than 15% since early November.

For years, U.S. automakers struggled in the shadow of foreign competition. Lately, though, GM and rival Ford (NYSE: F  ) have been at the forefront of global auto trends, especially in the ultra-competitive truck market. With GM's Sierra and Silverado truck models bringing in the majority of GM's global profit and Ford's F-150 representing a whopping 90% of its profits, the success of GM's revamped 2014 Chevy Silverado will be critical in its competitive efforts, and hints in this report of how that project is going could well move the stock.

Moreover, fears of a foreign comeback are largely overstated. It's true that Honda (NYSE: HMC  ) and Toyota (NYSE: TM  ) have earned back some of the market share that they lost following the Japanese earthquake disaster two years ago. But GM expects to release a new Chevy Corvette later this year as part of a massive set of redesigned models coming in the next year and a half.

The most important things to pay attention to in GM's report will be news of how the company is doing in China and Europe. In China, GM has had success in penetrating the local market via low-margin vehicles through a minority stake in a joint venture with Chinese partners, but it lacks the profit potential that Volkswagen has seen there. Meanwhile, GM could well consider bankruptcy due to resistance from labor unions over concessions designed to stop the bleeding there. With North America going well, what happens elsewhere in the world will make the biggest difference for GM going forward.

Learn more
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