Key Factors Influencing General Motors' (GM) Q3 Earnings

General Motors GM is slated to release third-quarter 2022 results on Oct 25, before market open. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.91 per share and $41.83 billion, respectively.

The Zacks Consensus Estimate for General Motors’ third-quarter earnings per share has been revised downward by 13 cents over the past 30 days. The bottom-line projection, however, indicates a year-over-year decline of 25.6%. The top-line estimate implies year-over-year growth of 56.2%.

In the last reported quarter, GM missed earnings estimates on better-than-expected revenues from North America, International and Financial segments. Over the trailing four quarters, the company topped the Zacks Consensus Estimate on three occasions and missed once, with the average surprise being 18.8%. This is depicted in the graph below:

General Motors Company Price and EPS Surprise

General Motors Company Price and EPS Surprise

General Motors Company price-eps-surprise | General Motors Company Quote

A Peek into Q3 Predictions

General Motors was the top-selling carmaker in the United States in the third quarter of 2022.GM’s total third-quarter U.S. sales increased 24.3% year over year to 555,580 vehicles. While Buick deliveries skid 27.4% year over year, sales of the other three brands — Chevrolet, GMC and Cadillac — posted double-digit year-over-year percentage gains. Sales of Chevrolet, GMC and Cadillac jumped 29.5%, 23.9% and 49.5% respectively.

The Zacks Consensus Estimate for the company’s GMNA segment’s wholesale vehicle sales is pegged at 777,000 units, implying an increase from 423,000 units in the third quarter of 2021. Our estimate for wholesale shipments from the GMNA segment is 734,000 units for the to-be-reported quarter. Thanks to higher unit sales and rising vehicle prices, we project General Motors’ revenues from the GMNA unit to jump 58.3% year over year. The consensus mark for the segment’s revenues is $34,397 million, implying a rise from $20,554 million recorded in the year-ago quarter. The consensus mark for operating profit from the segment is pegged at $3,834 million, indicating an increase of 80.4% year over year. Our estimate for the same is $3,268 million.

The Zacks Consensus Estimate for the company’s GMI segment’s wholesale vehicle sales is pegged at 234,000 units, implying an increase from 113,000 units in the third quarter of 2021. Our estimate for wholesale shipments from the GMI segment is 199,000 units for the to-be-reported quarter. The consensus mark for the segment’s revenues is $5,387 million, indicating a rise from $2,843 million recorded in the year-ago quarter. We project revenues of $5,481 million from the GMI unit. The consensus mark for the operating profit from the segment is pegged at $162 million, indicating a decline from $229 million. We expect profits from the segment to inch up 1.4% year over year.

As for the GM Financial unit, the company’s gloomy 2022 outlook for the segment raises concern. The Zacks Consensus Estimate for sales from the GM Financial unit is pegged at $3,304 million, down from $3,354 million recorded in the corresponding quarter of 2021. We anticipate the profits from the segment to contract more than 7% year over year. The consensus mark for GM Financial’s operating profit is $968 million, down from $1,093 million recorded in the year-ago quarter.

The consensus mark for the GM Cruise unit’s operating loss stands at $432 million, widening from $286 million incurred in the year-ago period. We project the unit to post an operating loss of around $247 million.

While higher-year-over-year shipments and revenues from GMNA and GMI segments bode well, weak forecasts from GM Financial and GM Cruise dim the overall third-quarter view. It is also to be noted that high commodity costs, including platinum group metals and steel prices, are likely to have played spoilsports. General Motors expects headwinds from commodity inflation and logistical challenges to be around more than $5 billion higher from 2021 levels as well as the prior projection. This further softens the outlook for the to-be-reported quarter.

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 -13.99%. This is because the Most Accurate Estimate of $1.64 per share is pegged 27 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 4 (Sell).

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 few 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:

Oshkosh OSK will release third-quarter 2022 results on Oct 27. The company has an Earnings ESP of +6.68% and a Zacks Rank #3.

The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at $1.13 per share and $2.14 billion, respectively. OSK surpassed earnings estimates in two of the trailing four quarters for as many misses, with the average surprise being a negative 13.62%.

Lear LEA will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +11.72% and a Zacks Rank #3.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $2.15 per share and $5.18 billion, respectively. LEA surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 14.41%.

Cummins CMI will release third-quarter 2022 results on Nov 3. The company has an Earnings ESP of +2.00% and a Zacks Rank #2.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.85 per share and $6.87 billion, respectively. CMI surpassed earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 1.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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