General Motors GM is expected to unveil its fourth-quarter 2023 results on Jan 30, before the commencement of trading. Market analysts forecast earnings of $1.09 per share and revenues totaling $43.34 billion for the quarter, according to the Zacks Consensus Estimate. The estimated earnings per share has witnessed a 3 cent upward revision over the last seven days, indicating a 48.58% year-over-year decline.
The company has consistently outperformed profit expectations in the past four quarters, with an average positive surprise of 23.82%. Despite this, the projected year-over-year decrease in revenues is anticipated to be around 6.42% for the quarter.
Understanding the Factors at Play
General Motors’ sales in the United States experienced a modest 0.3% year-over-year increase to 625,176 units during the fourth quarter of 2023. Notably, sales from the Buick brand soared by an impressive 57%. Moreover, the sales of Silverado and Sierra witnessed growth, registering an uptick of 0.82% and 9.8% year over year, respectively.
However, the company faced a downturn in the world’s largest auto market, China, reporting a 1% year-over-year decrease in vehicle sales during the same quarter. Despite the overall decline, specific brands such as Wuling & Baojun exhibited upward sales trends, with an 8.08% and 84.81% increase, respectively.
Additionally, the company’s operating income from the GMNA segment is anticipated to decline by 8% year over year. General Motors attributes this decline to the impact of the United Auto Workers strike, which lasted for six weeks and resulted in an estimated $600 million reduction in EBIT during the quarter. Conversely, the GMI segment is projected to see operating income rise by 13.9% year over year, suggesting a 0.9 percentage point margin expansion.
General Motors also plans to reduce $1 billion in fixed costs between 2023 and 2024, building on the success of its $2 billion cost-reduction plan initiated at the beginning of 2023. This is expected to have a positive impact on the company’s fourth-quarter margins.
Insights into Earnings Expectations
Market analysts using a proven model predict that General Motors is likely to outperform earnings expectations this season. The combination of a favorable Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the likelihood of an earnings beat. General Motors meets these criteria, boasting an Earnings ESP of +3.47% and currently holding a Zacks Rank #2.
Comparative Analysis
Among other key players in the auto sector, Lear Corporation, Ford Motor Company, and BorgWarner Inc. also exhibit a favorable combination that could potentially lead to an earnings beat in the upcoming quarterly reports.
Lear Corporation, set to release its fourth-quarter 2023 results on Feb 6, anticipates a positive earnings surprise based on an Earnings ESP of +1.36% and a Zacks Rank #3. Similarly, Ford Motor Company, also announcing its fourth-quarter 2023 results on Feb 6, holds an Earnings ESP of +4.93% and a Zacks Rank #3. Lastly, BorgWarner Inc., reporting its fourth-quarter 2023 results on Feb 8, has an Earnings ESP of +2.44% and a Zacks Rank #3.
Investors are encouraged to stay updated on upcoming earnings announcements using the Zacks Earnings Calendar.