General Motors GM is slated to release second-quarter 2022 results on Jul 26, before market opens. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.56 per share and $36.54 billion, respectively.
The Zacks Consensus Estimate for General Motors’ second-quarter earnings per share has been revised downward by 7 cents over the past 30 days. The bottom-line projection indicates a year-over-year decline of 20.8%. The top-line estimate, however, implies year-over-year growth of 6.9%.
In the last reported quarter, GM topped earnings estimates on better-than-expected profits from the North America, International and Financial segments. In fact, over the trailing four quarters, the company topped the Zacks Consensus Estimate on all occasions, with the average being 24.4%. This is depicted in the graph below:
General Motors Company Price and EPS Surprise
General Motors Company price-eps-surprise | General Motors Company Quote
While investors are keeping their fingers crossed for GM to retain its earnings beat streak in second-quarter 2022 as well, our model does not predict the same.
Things to Consider
General Motors’ U.S. sales came in at 582,401 vehicles in the second quarter, declining 15% on a year-over-year basis. Deliveries of Chevrolet, GMC, Buick and Cadillac brands skid 11%,14%, 56% and 6.7%, respectively. Escalating supply chain issues — aggravated by the Russia-Ukraine war — kept a lid on vehicle supply despite robust demand. However, rising average prices of vehicles amid tight inventories due to supply-demand mismatch are anticipated to have partially offset the decline in vehicle deliveries. The Zacks Consensus Estimate for General Motors’ Q2 revenues from the North America unit is pegged at $29,132 million, indicating an increase from $27,932 million generated in the year-ago period.
However, high commodity costs, a tough labor market and logistical challenges are likely to have played spoilsports. Escalating operating expenses are also anticipated to have weighed on segmental margins. The consensus mark for General Motors’ operating profit from the GMNA segment is pegged at $2,433 million, implying a decline of around 16% on a year-over-year basis.
As it is, the legacy automaker had already issued a warning early this month that its second-quarter results would be materially impacted by the severe ongoing supply chain snarls.
General Motors sold 484,200 vehicles in China during the second quarter of 2022, declining 36% year over year and marking the lowest levels since the first quarter of 2020. Sales recorded double-digit drops at all five brands — Buick, Cadillac, Chevrolet, Baojun and Wuling.The downside stemmed from persistent chip shortage and COVID-19 resurgence. Volumes declined 21% sequentially. The Zacks Consensus Estimate for operating profit from the GMI segment is pegged at $139 million, implying a decline from $328 million generated in the last reported quarter.
General Motors’ gloomy 2022 outlook for the GM Financial unit raises concern. The Zacks Consensus Estimate for operating profit from the GM Financial unit is pegged at $870 million, down from $1,581 million recorded in the corresponding quarter of 2021. Meanwhile, the consensus mark for the GM Cruise unit’s operating loss stands at $291 million, narrowing from $363 million incurred in the year-ago period.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for General Motors this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here
Earnings ESP: It has an Earnings ESP of -8.72%. This is because the Most Accurate Estimate of $1.42 per share is pegged 14 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: General Motors currently carries a Zacks Rank of 3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With the Favorable Combination
While an earnings beat appears uncertain for General Motors, here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Driven Brand Holdings DRVN has an Earnings ESP of +14.45% and a Zacks Rank #3.
The Zacks Consensus Estimate for Driven’s to-be-reported quarter’s earnings and revenues is pegged at 29 cents per share and $486 million, respectively. Encouragingly, DRVN surpassed earnings estimates in the last four quarters, with the average being 30.1%.
Lear Corporation LEA has an Earnings ESP of +7.58% and a Zacks Rank #3.
The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $1.19 per share and $4.79 billion, respectively. LEA surpassed earnings estimates in three of the last four quarters and missed once, with the average being 6.53%.
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