Wall Street Expectations for GM
According to average estimates compiled by LSEG, formerly known as Refinitiv, analysts are anticipating some significant figures from General Motors (GM).
These estimates project a 10.3% decrease in revenue compared to the previous year, along with a 45.3% decline in adjusted earnings per share.
In the fourth quarter of 2022, GM reported $43.11 billion in revenue, net income of $2 billion, and adjusted earnings before interest and taxes of $3.8 billion.
Factors Influencing GM’s Performance
Investors are not only eyeing GM’s quarterly earnings but also looking for potential residual or unforeseen expenses stemming from the company’s labor agreement with the United Auto Workers union, which was reached last year. Additionally, investors are interested in the company’s 2024 guidance.
While GM has enjoyed record profits due to favorable vehicle pricing, these profits are normalizing. Measures to cut costs are expected to help offset the impact of higher labor expenses resulting from the UAW contract.
In November, GM CEO Mary Barra announced that the company is finalizing a budget for 2024 that will fully compensate for the incremental costs of the new labor agreements.
GM’s 2023 Guidance and Other Updates
GM reinstated its 2023 guidance in November, which includes expected net income of $9.1 billion to $9.7 billion, or EPS of $6.52 to $7.02. The adjusted earnings before interest and taxes are projected to be around $11.7 billion to $12.7 billion, or around $7.20 to $7.70 per adjusted EPS. The company also expects adjusted automotive free cash flow of $10.5 billion to $11.5 billion.
This guidance takes into account an estimated $1.1 billion EBIT-adjusted effect from approximately six weeks of U.S. labor strikes, as well as costs associated with a $10 billion accelerated share repurchase program announced in November.
Furthermore, investors are eager to hear updates on GM’s new electric vehicles and its autonomous vehicle subsidiary, Cruise. Cruise is currently being investigated following an October accident involving a pedestrian in San Francisco. Last week, Cruise and GM released findings from internal investigations, highlighting cultural challenges, regulatory shortcomings, and leadership issues within the company. Officials emphasized that there was no intentional deception or misleading of regulators.