What Wall Street expects
Analysts polled by Thomson Reuters expect GM to report adjusted earnings of $0.01 per share on $31.04 billion of revenue for the fourth quarter. Both of those figures would be down sharply from the fourth quarter of 2018, when GM posted adjusted earnings of $1.43 per share on $38.4 billion of revenue. (Adjusted earnings exclude the effects of one-time charges.)
How GM's sales fared in the fourth quarter of 2019
- GM's U.S. sales fell 6.3% in the fourth quarter.
- The United Auto Workers' nationwide strike, which shut down all of GM's U.S. factories from mid-September to late October, led to tight supplies of key models, including the big-selling Chevrolet Equinox crossover.
- Supply issues explained much of GM's U.S. sales decline.
- GM prioritized deliveries of well-optioned pickup trucks to retail buyers; to some extent, that probably helped offset the margin impact of the strike.
- GM's sales in China fell 13.3% in the fourth quarter.
- The sluggish Chinese economy, intense competition in mass-market segments, and some anti-American sentiment arising from the Trump administration's trade-war bluster were probably all factors in the decline.
- GM is in the midst of a product-line overhaul in China, which should boost margins even if the market remains slow.
Why does Wall Street think GM's sales and earnings fell so much?
Wall Street -- like just about everyone else, including GM itself -- expects GM's fourth-quarter result to have been hurt by the UAW strike. That ongoing sales slump in China probably didn't help.
GM warned us that it would be a bleak quarter when it cut its full-year guidance in late October, right after the strike ended. That revised guidance calls for full-year adjusted earnings per share between $4.50 and $4.80.
Given that GM's adjusted earnings per share through the first three quarters of 2019 totaled $4.77, that revised range doesn't leave room for much of a profit.
What to expect from GM's earnings
Between the UAW strike and the ongoing China slump, GM was dealt a tough hand in the fourth quarter. That said, it appears to have taken some good steps to mitigate the impacts, including shuffling its truck deliveries to optimize profitability.
I think it's likely that GM will beat Wall Street's per-share estimate by at least a penny or two, and might beat it by enough to beat its own revised guidance from October. We'll find out when GM reports on Wednesday morning.