General Motors Q3 Earnings Preview: What to Expect for GM Stock

General Motors (NYSE: GM) is set to announce its third-quarter 2024 financial results, and investors are eagerly anticipating the performance of the automaker. Despite a challenging automotive market, GM’s stock has surged 37% year-to-date, outperforming the industry and its major competitors such as Ford and Toyota.

The consensus forecast expects earnings of $2.45 to $2.50 per share for the quarter, slightly ahead of last year’s figures and representing a year-over-year increase of around 9%. Revenues are projected to grow by about 1% to $44.7 billion. This growth is partly driven by strong sales of electric vehicles (EVs), with GM reporting a 60% year-over-year surge in EV deliveries, totaling 32,095 units in the third quarter.

GM’s U.S. vehicle delivery data for the last quarter showed a 2.2% year-over-year decline, primarily due to lower sales to fleet customers. However, retail sales rose almost 3%, with strong performances from the GMC, Cadillac, and Buick brands. The Chevrolet brand, however, saw weaker sales of cars and pickup trucks like the Silverado.

The company’s transition to electric vehicles is a key focus. GM reported significant sales of models like the Chevrolet Equinox EV, Chevrolet Blazer EV, and Cadillac Lyriq. Despite the positive EV sales, there are concerns about the broader EV market and the company’s long-term profitability targets. GM aims to achieve positive variable profits on its electric vehicles by the end of 2024 but faces challenges such as anticipated price reductions and rising commodity costs.

From a valuation standpoint, GM’s shares are considered relatively inexpensive, trading at a forward price/sales ratio of 0.32, which is below its five-year median and significantly lower than the industry average. This, combined with over $35 billion in automotive liquidity, positions GM for stability and long-term growth despite immediate risks such as rising costs and market pressures in China.

The recent rate cut by the Federal Reserve could also provide a tailwind for GM, as lower borrowing costs may stimulate demand for big-ticket purchases like vehicles. However, investors are advised to wait for the release of GM’s third-quarter results to gain a clearer picture of the company’s operations and potential recovery strategies.