Big sales of the Chevrolet Silverado pickup may have boosted GM's second-quarter results. But choppier waters could lie ahead. Source: General Motors Co.

Is General Motors (GM 1.16%) ready to get it in gear? We'll find out when the Detroit auto giant reports second-quarter earnings before the bell on Thursday. 

What analysts are saying:

  • Buy or sell? Thompson/First Call tracks 19 analysts covering GM. 11 say "buy", 7 say "hold", and one says "underperform".
  • Earnings? They say that GM will earn $1.08 per share on revenue of $40.62 billion, a big jump from $0.58 per share in earnings and $39.65 billion in revenue GM reported in the second quarter of 2014, when profits were squeezed heavily by mounting recall costs.

What management is saying
GM is investing heavily in future growth, but it'll be a few years before those investments start to pay off in a big way. CEO Mary Barra's long-range plan targets 10% margins in North America (next year), 5 million vehicles sold in China (in 2018), global margins above 8% (in 2021 or thereabouts), and so on.

Since taking over as CEO early in 2014, Barra has focused on quality and safety issues (a consequence of last year's recall scandal) -- while working on a long-term plan to make the most of GM's massive global scale. The plan is a good one, and all signs are that GM is executing on it well: Patient investors should be rewarded in time.

GM's guidance has been reasonably upbeat. Last quarter, Barra said that she expects GM's total pre-tax earnings and profit margin for the full year to improve on the company's 2014 results, even after adjusting for the big costs of the recalls that dented last year's earnings. 

She also expects improved full-year results in all four of GM's regional business units. But cash flow is likely to be flat, or possibly slightly higher, because GM's spending has increased as it gears up for several important new-product launches.

What management is doing
Under Barra, GM has been careful about its guidance, and it has mostly delivered. Last quarter marked the seventh in a row in which GM was able to increase its operating profit margin in North America, its most profitable region. Strong truck and SUV sales could drive another increase this quarter, though sales of GM's much-improved small cars have lagged.

But losses in Europe have continued, as GM continues to work on a turnaround plan that is expected to return the region to breakeven or better next year. South America is also a work in progress, as a big recession in Brazil has clobbered new-car sales, while a currency mess in Venezuela has proven to be an expensive headache. But again, GM has been cutting costs and working to turn things around.

Meanwhile, in China, GM managed to eke out a year-over-year sales gain through the first half of 2015 while archival Volkswagen Group saw sales fall. But an economic slowdown is expected to squeeze results sooner or later, and GM's pricing (and thus its profit margin) may already be under pressure. 

What this Fool says
GM continues to make good progress on its long-range plan. But in the near term, there are concerns: GM is making big money on sales of pickup trucks and big SUVs in the U.S., but rival Ford will soon be in a position to push back aggressively on GM's recent market-share gains in full-size pickups. Meanwhile, GM is spending big to bring new cars to market, but cars in general have lagged SUV and truck gains recently.

In China, where GM is the second-largest automaker, and where it is investing billions to expand further, the economy appears headed for a slowdown. That won't be catastrophic for GM, but it could could dent the General's bottom line for the next few quarters. The impact may begin to show up in second-quarter numbers.

I think GM could well beat Wall Street's estimates by a penny or two, mostly on the strength of truck sales in the U.S. But the net income figure is likely to be less impressive: GM has already warned that it will take a $600 million one-time charge as a result of the devaluation of the Venezuelan currency. (Rival Ford took a similar charge last year.) But that's an accounting charge, and it isn't expected to affect GM's free cash flow. 

I also think it's possible that Barra and CFO Chuck Stevens will trim GM's guidance a bit, particularly around the situation in China. In fact, barring any surprises, I expect that GM's guidance around China -- changed or not -- will be the big news coming out of Thursday's earnings. Stay tuned.