General Motors (NYSE:GM) Spooks the Market Even After Raising the Guidance - Yahoo Finance

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This article first appeared on Simply Wall St News.

General Motors Company(NYSE:GM)hit the 4-month low after the company posted a small positive surprise but warned about the outlook for the rest of the year.

The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of.With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting.

Q2 2021 Earnings Results

• Adjusted EPS US$1.97 (estimate S$1.89)

• Revenue US$34.2b (estimate US$30.9)

• EBIT-adjusted between US$11.5b and US$13.5b FY2020

Meanwhile, Wedbush Securities keep a positive view on GM, quoting long-term focus and the emerging electric vehicle market. The firm reiterated the price target of US$85, over 50% from current levels.

View our latest analysis for General Motors

earnings-and-revenue-growth

Taking into account the latest results, the most recent consensus for General Motors from 16 analysts is for revenues of US$135.8b in 2021, which, if met, would be a solid 11% increase in its sales over the past 12 months. Statutory earnings per share are expected to shrink 7.6% to US$5.77 in the same period. Yet before the latest earnings, the analysts had been anticipated revenues of US$136.5b and earnings per share (EPS) of US$5.99 in 2021. So it looks like there's been a slight decline in overall sentiment after the recent results - there's been no significant change to revenue estimates. Still, the analysts did make a slight dip in their earnings per share forecasts.

The consensus price target held steady at US$72.85, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on General Motors, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$60.00 per share. These price targets show that analysts have differing views on the business, but the estimates do not vary enough to suggest that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that General Motors' growth rate is expected to accelerate meaningfully, with revenues forecast to exhibit 23% growth to the end of 2021 on an annualized basis. That is well above its historical decline of 4.4% a year over the past five years. By contrast, our data suggest that other companies (with analyst coverage) in similar industries are forecast to see their revenue grow 22% per year. So while General Motors' revenues should improve, it seems that they could grow at about the same rate as the overall industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for General Motors. Happily, there were no fundamental changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the business's intrinsic value has not undergone significant changes with the latest estimates.

Keeping that in mind, we still think that the longer-term trajectory of the business is much more critical for investors to consider. We have forecasts for General Motors going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 1 warning sign for General Motors that you need to consider.

Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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