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GM, Under Armour Press Higher as Stock Markets Stay Mixed

By Dan Caplinger - Updated May 5, 2021 at 2:35PM

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Investors are starting to get a little vertigo after big moves to all-time highs.

The stock market is finally starting to show some signs of bull market fatigue, with stock indexes over the past couple of days pushing briefly higher only to give up gains as the day wears on. That was once again the case early Wednesday, as gains at the open quickly evaporated to leave most benchmarks near the unchanged mark. Shortly before 10:15 a.m. EDT, the Dow Jones Industrial Average (^DJI 0.00%) was down 24 points to 34,109. The S&P 500 (^GSPC -0.07%) managed to pick up 4 points to 4,169, and the Nasdaq Composite (^IXIC 0.00%) posted an 11-point gain to 13,645.

Earnings continued to pour in, with hundreds of companies set to report their latest results today. Among the most notable, both General Motors (GM 1.34%) and Under Armour (UA 1.60%) (UAA 0.92%) managed to push higher as their quarterly reports indicated success in setting up for a potential economic rebound during the remainder of 2021.

GM motors upward

Shares of General Motors rose more than 2% on Wednesday morning. The automaker faces some obstacles ahead, but it's confident it can overcome them and take advantage of improving conditions in the industry.

GM's numbers were mixed. Revenue of $32.5 billion was down about half a percent from year-ago levels. However, net income soared to $3 billion, and that produced adjusted earnings of $2.25 per share. That was more than triple GM's bottom line from the previous year's first quarter. The automaker got positive contributions to pre-tax income from both its home North American segment and its international division, with its Chinese joint venture seeing substantial sales gains.

Front grill of Hummer electric pickup truck

Image source: General Motors.

Yet the bigger question is how General Motors can capitalize on its long-term strategy. The automaker is allocating $27 billion to electric vehicle and autonomous driving functionality in the next four years, planning 30 new electric vehicle launches including the coming Hummer EV pickup truck. Between building out charging station infrastructure, boosting battery production capacity, and making hands-free driver assistance available on nearly two dozen models by 2023, GM is pulling out all the stops.

GM has high confidence that its full-year guidance for $4.50 to $5.25 per share in adjusted earnings and positive free cash flow of $1 billion to $2 billion in the automotive segment will pan out. With the stock trading at just 11 to 13 times that earnings projection, General Motors still has a lot of appeal to value investors.

Under Armour gets stylish again

Elsewhere, shares of Under Armour were up around 8%. The athletic-apparel maker has seen an impressive rebound in the past year, and its latest quarterly results gave investors more confidence about its future path.

Under Armour's first-quarter financial results were generally strong. Revenue jumped 35% from year-ago levels, with North American sales climbing 32% and international revenue growing at a 58% pace. The Asia-Pacific region bounced back the most sharply, more than doubling year over year. Under Armour's accessories segment had the strongest growth at 73%, with footwear sales climbing 47% and apparel revenue up 35%. The company also reversed a massive year-earlier loss with modest earnings of $0.17 per share.

Under Armour also boosted its full-year guidance sharply. It now sees revenue climbing in the high teens on a percentage basis, up from previous expectations for top-line growth of less than 10%. On the earnings front, Under Armour more than doubled its previous range, now seeing adjusted earnings of $0.28 to $0.30 per share.

There are still issues relating to COVID-19 for Under Armour to overcome, and there's still some uncertainty ahead. Nevertheless, the company is hopeful that the worst is behind it, and it looks as though pent-up demand for its products is starting to show up in Under Armour's sales numbers.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Under Armour (A Shares) and Under Armour (C Shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
GM
$38.46 (1.34%) $0.51
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,309.51 (0.00%) $0.00
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,207.27 (-0.07%) $-2.97
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
^IXIC
$12,854.80 (0.00%) $0.00
Under Armour, Inc. Stock Quote
Under Armour, Inc.
UAA
$9.85 (0.92%) $0.09
Under Armour, Inc. Stock Quote
Under Armour, Inc.
UA
$8.89 (1.60%) $0.14

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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