General Motors GM is slated to release second-quarter 2021 results on Aug 4, before market open. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.89 per share on revenues of $29 billion.
The auto giant registered robust profits in the last reported quarter amid stellar demand for SUVs as well as pick-ups.
Over the trailing four quarters, General Motors topped the Zacks Consensus Estimate on all occasions — the average surprise being 75.8%. This is depicted in the graph below:
General Motors Company Price and EPS Surprise
General Motors Company price-eps-surprise | General Motors Company Quote
Which Way are the Estimates Headed?
The Zacks Consensus Estimate for General Motors’ second-quarter earnings per share has been revised upward by six cents to $1.89 over the past seven days. This also marks a reversal of the year-ago quarter’s loss per share of 50 cents. Moreover, the Zacks Consensus Estimate for revenues suggests a year-over-year jump of 72.9%.
Earnings Whispers
Our proven model predicts 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.
Earnings ESP: General Motors has an Earnings ESP of +19.83%. This is because the Most Accurate Estimate of $2.26 per share comes in 37 cents higher 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 flaunts a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Setting the Tone
Amid the rising preference for personal mobility, improved credit conditions and fiscal stimulus, demand for vehicles was encouraging in second-quarter 2021. General Motors’ second-quarter top and bottom lines are likely to have benefited from this upbeat scenario.
General Motors’ retail sales in the United States, its most significant market, during the quarter under review jumped to 688,236 vehicles, marking a year-on-year rise of 40%. This performance was driven by solid customer demand for pick-ups and SUVs but slightly constrained by tight inventories amid the global semiconductor crunch.
General Motors seems to have gained from the rising vehicle sales in the world’s largest car market i.e. China, wherein it commands a huge presence. Encouragingly, the automaker’s retail sales in China during the June-end quarter were 750,800 vehicles, marking a year-on-year increase of 5%. This upside can be attributed to outperformance in luxury and premium vehicles, SUVs and MPVs, including the Cadillac CT5 and XT6, Buick LaCrosse, Enclave and GL8 family. Sales of new energy vehicles (NEVs) across the company’s brands also delivered a robust performance.
For the quarter under discussion, the Zacks Consensus Estimate for net sales in the International market is pegged at $2,937 million, suggesting a jump from the $1,677 million recorded in the prior-year quarter. In fact, the consensus mark for wholesale volumes in the International markets is 145,000 units, calling for a year-on-year rise from the 90,000 units reported in year-earlier period.
The consensus estimate for net sales in the North American market (which contributes a bulk of the company’s total revenues) is pinned at $22,053 million, indicating a surge from the $11,604 million recorded in the second quarter of 2020. Also, the consensus mark for wholesale volumes in the said segment is 558,000 units, calling for a jump from the 331,000 units seen in the last-year quarter.
For the to-be-reported quarter, the Zacks Consensus Estimate for net sales in the Financial segment is pinned at $3,471 million, suggesting an increase from the $3,423 witnessed in the year-earlier period.
Thus, surging vehicle deliveries in the United States and China, along with projected rise in revenues from the North America, International and financial segments, are likely to have fueled the second-quarter margins for General Motors.
Other Stocks to Consider
Here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:
Tenneco TEN has an Earnings ESP of +1.2% and currently carries a Zacks Rank #3. The company is set to release quarterly numbers on Aug 5.
Fox Factory Holding Corp. FOXF has an Earnings ESP of +1.15% and carries a Zacks Rank #2, at present. It is scheduled to report earnings results on Aug 5.
Lear Corporation LEA has an Earnings ESP of +3.05% and carries a Zacks Rank of 3, currently. The company’s quarterly figures are slated to be out on Aug 6.
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